What Happens if Social Security Overpays You?

Social Security overpayments have become an increasingly prevalent and concerning issue, casting a shadow of financial uncertainty over beneficiaries who may unexpectedly find themselves owing substantial sums despite no fault of their own.

During the 2021 fiscal year, the Social Security Administration’s inspector general reported an estimated $6 billion in overpayments made by the agency. These overpayments highlight the critical need for individuals to proactively manage their Social Security benefits and avoid costly surprises down the road.

One crucial step to mitigate the risk of overpayments is for recipients of Social Security retirement benefits to review their earnings history on record with the agency well before retiring. The amount you receive in retirement benefits is directly tied to your payroll tax contributions during your working years. Mistakes in this information can lead to problems in the future. Fortunately, you can easily access your earnings history through your annual Social Security statements or your My Social Security account on the agency’s website.

For those nearing retirement or already retired, helpful tools are available to calculate the optimal benefits you should receive. The “Maximize My Social Security” program comprehensively analyzes various scenarios, such as determining when you and your spouse should claim retirement benefits. This program, priced at $39 per year, can provide valuable insights. Additionally, AARP offers a free basic Social Security calculator for estimating your benefits.

Experts emphasized that it’s essential for all beneficiaries to ascertain their correct benefit amounts because it may take the Social Security Administration years to rectify any errors.

If you work in the public sector, particularly as a teacher or firefighter, it’s crucial to understand whether you are part of a non-covered pension plan. Instead of contributing to the Social Security system, you may contribute to a state or local government-run pension plan. When you retire, you must inform Social Security about this non-covered pension income. Failure to do so, coupled with Social Security benefits from another job, can result in overpayments.

Social Security disability beneficiaries who return to work must exercise caution. After completing the initial trial work period, recipients cannot exceed a specified monthly income limit, known as Substantial Gainful Activity. In 2024, this limit stands at $1,470 for non-blind recipients but may change annually. Furthermore, if you receive both Social Security disability benefits and worker’s compensation, reporting worker’s compensation is a must to avoid potential overpayments.

Overpayments are particularly prevalent in the Supplemental Security Income (SSI) program, which assists individuals with low incomes who are elderly or disabled. Since eligibility criteria have not been adjusted for inflation, staying informed is important. If your individual assets exceed $2,000, you may no longer qualify for benefits. The rules surrounding SSI can be intricate, and even the value of a couch you sleep on while homeless must be declared.

Recipients eligible for a full subsidy of their Medicare Part D premiums may also qualify for a $10 monthly repayment program, ensuring that Social Security recovers overpayments without causing undue financial hardship. However, beneficiaries must proactively contact Social Security to request this program; ignoring overpayment notices may result in a suspension of benefits.

While overpayments are a significant concern, it’s worth noting that Social Security also underpays recipients. In 2021 alone, the agency underpaid beneficiaries by $1.4 billion. If you believe you should be receiving more, it’s crucial to initiate the correction process with Social Security to increase your chances of receiving the owed funds.

The key to resolving discrepancies or mistakes is to act promptly. Inform the agency of any issues with your earnings history or benefit payments as soon as possible. Most experts stress the importance of persistence and ongoing communication with the agency until the error is resolved. It is essential to document all interactions, including correspondence and conversations, and keep track of who you spoke with, the dates, content, and their contact information.

According to legal experts, if you can demonstrate that you alerted Social Security to an error and received assurance from the agency that everything was in order, you may have grounds to challenge overpayments and potentially have repayments waived. Social Security can be reached through your local field office or the national hotline at 1-800-772-1213.

Finding legal assistance for overpayment issues can be challenging due to limited financial incentives for attorneys to take on such cases. However, organizations like the National Organization of Social Security Claimant Representatives provide resources for attorneys specializing in Social Security matters. Individuals on SSI with low incomes may also qualify for free legal aid lawyers, some of whom may take on overpayment cases. Additionally, those with disabilities may be eligible for free legal assistance through federally funded protection and advocacy programs nationwide.