Cutting 1/2” foam into circles

The overcut setting in the Advanced tab of the Cut Settings for the layer will allow you to cut past the original starting point on closed shapes.
Having said that, this may require experimentation. From what I’ve seen of foam it’s not necessarily an undercut that’s responsible for parts not falling out.
While you’re at it, you may want to also look at “Start pause time” and “End pause time” settings in the same Advanced tab.