DHS Overpayments

Authored By: Iowa Legal Aid

Sometimes a person who is receiving a public benefit (like FIP or Medicaid) from Iowa’s Department of Human Services (DHS) receives more money than he or she should or gets a benefit the person should not have received at all.  When that happens, the extra money is called an overpayment.  Sometimes it happens because the person forgets to report a change in income, or receipt of money that would be considered a resource.  Sometimes it happens because DHS makes a mistake. DHS may send money or provide a benefit to a recipient and later decide that what they provided was not correct.

If you get an overpayment from DHS, be sure to know the answers to three important questions.

What does DHS do if  they give you benefits by mistake?

  • If DHS decides you were overpaid, they will ask for the money back from you.  
  • A Notice of Overpayment is sent to you.

What options are available to a person who gets a notice of overpayment from DHS?

  • If you disagree with what the Notice of Overpaymentsays, you have the right to appeal.  
  • To file an appeal, send a letter to DHS, with your name, the date and your case number.
  • The letter should say you are appealing an overpayment notice. Be sure to give the date on the overpayment notice.
  • A hearing will be scheduled on your appeal. The hearing will give you the chance to show why you think there was not an overpayment to you.
  • DHS can waive recovery of a FIP overpayment if you are no longer receiving FIP and the overpayment is less than $35.00 (as long as the overpayment was not the result of fraud). 

How can DHS collect an overpayment?

  • DHS can reduce the amount of your future FIP payments until the extra money is paid back.
    • Normally, when someone is overpaid FIP because of a DHS error, that overpayment is collected from future FIP payments at a rate of 1% of the FIP payment. 
    • When someone is overpaid FIP, that overpayment is collected from future FIP benefits at a rate of 10% of the amount of each FIP payment. That is how FIP overpayments are handled, whether due to a mistake of the person getting benefits, agency error, or if benefits were continued during an appeal that was eventually denied

Example:   If your FIP payment is normally $361.00 per month, then 1% of that is $3.61 per month; 10% of that is $36.10 per month.  If you no longer get FIP, you are expected to pay at least $50 per month toward the overpayment. 

  • DHS can reduce the amount of future food assistance payments until the extra money is paid back.  For inadvertent household error and administrative error claims. DHS will withhold 10% or $10 from future payments (whichever is more). For intentional program violation claims, DHS will withhold 20% or $20 (whichever is more). 
  • DHS can pursue other collection methods as well, such as:
    • Federal income tax offsets;
    • Taking money out of other federal payments to repay a food assistance overpayment when a person no longer takes part in the program;
    • State income tax offsets;
    • Withholding payments for food assistance, FIP and Medicaid;
    • From lottery winnings;
    • Estates (if a person has passed away); and
    • By bringing a court action.

Helping low-income Iowans who face legal problems impacting a basic family need like income is a priority for Iowa Legal Aid. To find out if help is available for a legal problem you may have, call Iowa Legal Aid at 1-800-532-1275.

Last Review and Update: Jul 29, 2020
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