Social Security overpayments: Tips to prevent them
This week on 60 Minutes, correspondent Anderson Cooper reports on what happens when Social Security overpays people who receive benefits. Beneficiaries may find out years later that they owe tens of thousands of dollars—even if it was not their fault.
While researching the story, the 60 Minutes team, including producer Andy Court and associate producer Annabelle Hanflig, asked experienced professionals in the field: What can people do to reduce the chances of getting an unexpected bill from Social Security? Here are some of those tips, including new information about changes the Social Security Administration has enacted since the 60 Minutes story first aired in November 2023.
Retirement benefits
If you receive Social Security retirement benefits, one of the best ways to prevent overpayments is to check the earnings history Social Security has on record for you. You can do this before you retire.
How much Social Security should pay when you retire is determined by how much you contribute in payroll taxes while you're working. If the agency has the wrong information, you may face problems years later. You can find the information on your annual Social Security statements or on your My Social Security account on the Social Security Administration's website.
If you are nearing retirement or have already retired, there are products that can help you figure out how much you should be getting. A program called Maximize My Social Security lets you analyze complex scenarios, like when you and your spouse should claim retirement benefits, since who claims first and when can make a big difference. The program costs $39 a year.
AARP also has a free basic Social Security calculator to determine how much you should be getting.
Specialists 60 Minutes spoke with advised that all recipients should figure out what they should be receiving because it can take the Social Security Administration years to catch mistakes.
Non-covered pension plan
If you work in the public sector—for example, as a teacher or a firefighter—it's important to know whether you're part of a non-covered pension plan.
If you are, instead of paying into the Social Security system, you are paying into a pension plan run by a state or local government. When you retire, you must tell Social Security about this non-covered pension money. If you don't and you receive Social Security from another job you had, you may end up being overpaid.
Social Security disability benefits
If you're receiving Social Security disability benefits and decide to go back to work, you need to be extra careful. After an initial trial work period is over, you cannot make more than a set amount per month, or you will no longer be eligible for disability benefits. That monthly income limit is called Substantial Gainful Activity. The monthly limit for 2023 is $1,470 for non-blind recipients, but the amount changes each year.
If you are receiving both Social Security disability benefits and worker's comp, you must report the worker's comp. If you don't, you may end up owing Social Security a lot of money.
Supplemental Security Income
One of the largest sources of overpayments comes from Supplemental Security Income (SSI), a program for people with low incomes who are elderly or disabled. Because the eligibility guidelines have not been updated for inflation in many years, the threshold for eligibility is becoming more stringent. if your individual assets go above $2,000, you no longer qualify for benefits.
The rules for SSI can be complex. For example, if you are unhoused and you sleep on a friend's couch, you must declare the value of that couch.
If you qualify for a full subsidy of your Medicare Part D premiums, then you also qualify for a $10 per month repayment program. That means Social Security won't charge you more than $10 a month to recoup your overpayment. But you must contact Social Security and ask them for it. If you ignore the overpayment notice, the agency will automatically start recovering 10% from every check, or $10, whichever is more.
Underpayment
Just as some people are overpaid, Social Security also underpays recipients. According to a report by the agency's inspector general, Social Security underpaid recipients by $1.4 billion during the 2021 fiscal year.
When this happens, Social Security is supposed to alert people and pay the remainder of the money. But your chances of getting that money are greater if you figure out that you should be receiving more and initiate the correction process with Social Security.
When you notice a mistake
If you notice a mistake—whether it is with the earnings history Social Security has for you, or with the payments Social Security is sending—you must let the agency know about it as soon as possible. Experts told 60 Minutes that you must be persistent and continue alerting the agency until you know they have fixed the error.
They also advised that you keep records of all your communications with the agency, including everything you send and everything you receive. Keep detailed notes on who you talked to, when you talked to them, what they said, and how you can get in touch with them again.
According to legal experts, if you can prove that you alerted Social Security about a mistake and someone at the agency assured you it was fine, then they have given you misinformation. According to the agency's rules, this can be grounds for you to challenge the overpayment and possibly get the repayment waived.
You can contact Social Security by calling or visiting your local field office or by calling the national hotline: 1-800-772-1213.
Finding legal aid
It is often hard for people with overpayment problems to find lawyers to represent them because there is little financial incentive for attorneys to take on these cases. The National Organization of Social Security Claimant Representatives is an organization for attorneys who handle Social Security cases.
People on SSI often have incomes that qualify them for free legal aid lawyers, some of whom will take on overpayment cases. Additionally, people who are disabled may qualify for free legal help from federally financed protection and advocacy programs throughout the country.
Recent changes that could save you money
In March, Social Security Administration Commissioner Martin O'Malley laid out new rules regarding accidental overpayments. The four-step plan is meant to help beneficiaries who unknowingly received overpayments.
Here are the key changes:
- If you receive a new overpayment notice for less than $2,000, you can now request that the entire amount be waived over the phone, without submitting a written application, as long as there's no evidence of fraud. You can call your local Social Security office or the agency's national hotline at 1-800-772-1213 to make the request. The previous threshold for getting a waiver without a written application was $1,000.
- As of March 2024, the Social Security Administration will not withhold more than 10% of your monthly Social Security benefit or $10 (whichever is more) to collect an overpayment. This is true only for cases where there is no evidence of fraud or other unusual factors. If more than 10% is being withheld from your check to recover an overpayment, you can call and ask for the amount withheld to be reduced. You will not have to provide detailed financial information to have the withholding rate reduced to 10%, the agency says.
- It's now possible to repay an overpayment debt over 60 months without submitting detailed financial information. Previously, the limit was 36 months. The new 60-month plan is an option even if you currently have a repayment program, the agency says. Social Security does not charge interest on overpayment debts.
- If you qualify for a full subsidy of your Medicare Part D premiums, then you also qualify for a $10 per month repayment program. That means Social Security won't charge you more than $10 a month to recoup the overpayment. But you must contact Social Security and ask them for the $10 a month plan. If you ignore the overpayment notice, the agency will automatically start recovering 10% of your check, or $10, whichever is more.
The video above was originally published on November 5, 2023. It was produced by Brit McCandless Farmer, Will Croxton, Andy Court, and Annabelle Hanflig and edited by Sarah Shafer Prediger.
