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What to Do When Social Security Benefits Are Wrong

In cases of overpayment or underpayment, here's how to get things fixed

Social security when you are overpaid/underpaid

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If you receive an overpayment notice from Social Security, you have 60 days from the date you received the notice to file an appeal.

En españolQ. Friends tell me that sometimes their Social Security payments are larger than they expect. And sometimes they're smaller. Why does this happen, and what can people do about it?

A. Good questions and very timely, too. The Social Security Administration (SSA) works hard to deliver benefit payments to almost 60 million people each month, but it's not always possible to maintain complete accuracy.

Mispayments have a lot of causes: human error at Social Security offices, computer malfunctions and rules that require that payments continue while reductions are being appealed. But many errors occur because people fail to inform Social Security of "life changes" such as a rise in income or the death of a family member—events that can affect the amount of a benefit. If changes are not reported on time, months of incorrect payment can result, along with the eventual hassle of sorting it out.

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The programs where overpayments are most common include disability and Supplemental Security Income (SSI), which helps the aged, the blind and disabled people with very few assets.

Q. If Social Security overpays you, do you have to return the money?

A. Generally, yes.

Q. How does it get the money back?

A. Typically, it withholds some or all of the monthly payments that you would normally receive until the debt is settled. It also has authority to seize wages or income tax refunds. Social Security folks can be tough, but they will also consult with you to work out a repayment plan that you can afford. In some cases, they can forgive debts if you weren't responsible for the overpayment and can show that you don't have the money to repay it.

Compassion is at work in these waivers, but so is budgetary sense. In some cases, going after small repayments can cost the agency more in staff and legal costs than it collects. For instance, Social Security has estimated that from fiscal 2008 to fiscal 2013, it spent $323 million going after small overpayments and got back $109.4 million. In other words, SSA spent $213.6 million more than it received.

Q. What happens when Social Security discovers an overpayment?

A. It will mail you a notice telling you why it thinks you have been overpaid, and what your options are to repay the debt. The notice will explain your appeal rights. If you don't agree that you've been overpaid, you can appeal by filing Form SSA-561, by calling Social Security or by visiting a Social Security office. You have 60 days from the date you receive the overpayment notice to file your appeal.

If you believe you should not have to pay back the money, you can request a waiver by filing Form SSA-632. You'll have to demonstrate that the overpayment was not your fault and would be a financial hardship to pay back. Social Security will decide whether to grant you a waiver.

Q. Do we have any idea how much overpayments cost the agency?

A. In June 2015, Social Security's inspector general reported that the agency had overpaid people on disability by an estimated $16.8 billion over a 10-year period. About $8.1 billion of that sum had been recovered, the agency said.

Almost a quarter of reviewed overpayments involved medical improvement cases where people may appeal SSA efforts to cut off their benefits. Under SSA rules, the agency is required to continue benefits while the appeal is in progress.

In fiscal 2014, the agency says, it collected $3.32 billion in overpayments involving a variety of benefit types.

Q. Given this history of overpayments, what is Social Security doing to prevent future payment errors?

A. Among the efforts: It conducts medical and work-related reviews to determine if people who receive disability benefits are still disabled and still eligible for payments. Similar reviews take place in the SSI program. Approximately 99.8 percent of retirement, survivor and disability Social Security benefits were free of overpayment in fiscal year 2013, according to a Social Security spokesman.

Q. What about underpayments?

A. They happen, though it's rare. Social Security claims that in fiscal 2013, 99.9 percent of all benefits had no underpayments. Often underpayments involve errors in your earnings history, the year-by-year listing in Social Security's computers of how much you made over your career. Your benefit is based on these numbers, and generally speaking, higher pay equals a higher benefit.

Ordinarily you can't correct your earnings if more than three years, three months and 15 days have passed since the end of the taxable year in which the wages were paid.

But exceptions may be made, for example, if:

  • You have evidence, such as IRS tax returns, that wages didn't make it onto your Social Security work record.
  • Errors were due to omissions of wages from employer reports.
  • Wages reported by your employer as paid to you are not shown in Social Security records.

To seek a correction of your earnings record, call 800-772-1213 (TTY 800-325-0778). Before calling, you should assemble W-2 forms, pay stubs and other documents that show your earnings history. For more details, see "How to Correct Your Social Security Earnings Record."

Q. What can I do to prevent incorrect payments from happening in the first place?

A. The main thing is to keep alert to "life changes" that will affect the benefit you're due and tell Social Security. For a list of these changes, see "What You Need to Know When You Get Retirement or Survivors Benefits."

Also, it's a good idea to keep an eye on your bank account. If a benefit payment suddenly changes, seeming too high or too low, get in touch with Social Security and ask why.

Stan Hinden, a former columnist for the Washington Post, wrote How to Retire Happy: The 12 Most Important Decisions You Must Make Before You Retire. Have a question? Check out the Social Security Mailbox archive. If you don't find your answer there, send an email to the Social Security Mailbox.

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