For a considerable number of Americans, planning for retirement entails taking into account the possibility of receiving Social Security benefits. However, at some point, a retiree may receive an unforeseen notice in the mail which lets them know that the benefits they had been receiving were overstated. This can be overly dramatic especially so when it is associated with a downward revision of the payments in question. In case you or someone who is close to you has suffered from a change in the Social Security payment, here is what you should keep in mind regarding this situation and the resolution measures available.
Why Did My Social Security Payment Change?
The Social Security Administration (SSA) has its practices for assessing the validity of an overpayment or underpayment of benefits. The most straightforward are:
1. Computational Errors: There have been instances where the SSA has erred in computing the benefit entitlement based on income history or any other reason.
2. Reporting Changes: Whenever there is a change in the beneficiary’s income, marital status, or even residence, the SSA must be informed. Otherwise, erroneous amounts may be paid.
3. Appeals and Payment Continuances: In a situation, where you are requesting for reconsideration of a reduction in benefits, the SSA can decide to carry on paying you the prior amount as this is under review. If the appeal is unsuccessful, then the payments made in that interval can be deemed to be wrong.
A recent example of this situation involves a retiree who received a letter from the SSA stating that his “previous amount was incorrect” and that his future payments would be adjusted to reflect the accurate amount.
What Should You Do If You Receive an Overpayment Notice?
When the Social Security Administration (SSA) has informed you that the agency has overpaid you, the SSA expects you to refund the amount that is more than your entitlement. This is what you can do:
1. Analyze The Letter: The SSA will always give reasons why an overpayment has occurred. Therefore, make sure you go through the letter to find out what happened and how much was overpaid.
2. Payment Options: There may be several repayment options that become available. For instance, if you are still under the benefits, it could be that a specific percentage will be deducted from your future payments to pay the overpayment. The SSA ordinarily retains 10% of your monthly benefits until the entire overpayment is recovered. If you are not under benefits anymore, you will have to come up with a complete payment or payment scheme.
4. Reevaluation of Debt as Well as Reconsideration Office: By Form SSA-632, if you consider that it is not your fault that the SSA overpaid you or repaying it would cause you unreasonable financial problems, you can request a Waiver. Note that if you are not satisfied with SSA’s determination, you can appeal against it by filing Form SSA-561-U2 and submitting the same.
How Overpayments Happen
While it may be hard to believe, the SSA makes more than its fair share of overpayment errors. With the SSA disbursing billions in benefits every year, errors are common. In the fiscal year ending in September 2022, the SSA reported approximately $13.6 billion in improper payments of which $11.1 billion were stated as overpayments.
Here are some common causes of overpayments:
- Changes in Income: If a retiree goes back to work or if there is a significant change in income, this has to be reported to the SSA. Failure to report this information threatens the persistence of payment and may also trigger an overpayment scenario.
- Incorrect Information: The SSA may be provided with erroneous or not up-to-date information regarding the beneficiary’s earnings or eligibility. This is mainly due to the un-updated processing of other characteristics like marital status or even health conditions.
- Delayed Appeals: If a beneficiary appeals for the reinstatement of benefits that have been reduced or terminated, the SSA may allow the beneficiary to continue receiving the prior amount for their statement of claims. In case the appeal is lost, these claims become overpayment claims.
Can I Be Underpaid by Social Security?
Although it occurs less frequently, underpayments can also take place. Underpayment occurs when the Social Security Administration miscalculates the pension benefits of a retiree due to a miscalculation or an internal error. If you feel that your Social Security benefits are not as much as they should be, follow these steps:
1. Check Your Earnings Record: Access your My Social Security account and look at your earnings record. Inaccuracies in the earnings history can, in turn, affect the amount of the benefit.
2. Reach Out to the SSA: You can either call the SSA at 1-800-772-1213 or go to a local Social Security office to file a report. Have supporting documents like W-2 forms or tax returns on hand to corroborate your report.
3. Get Receivables: If the SSA determines that you have been underpaid, they will pay out the total corrected amount without any prior authorization or pay it out as top-ups to the monthly payments.
How to Avoid Future Issues with Your Social Security Benefits
To avoid potential overpayments or underpayments, it’s essential to stay proactive:
1. Update any changes in Life Situations: A member must report to the Board changes in marital status, income, or place of residence immediately that is, within 48 hours following the occurrence of the change. This enables the member’s benefits to be adjusted in an appropriate period.
2. Look into the Benefits that you Have Every Year: Log in to your My Social Security account each year to verify that your benefits are appropriately computed.
3. Preserve these Documents: Make sure to keep valuable hard copies of financial records, including but not limited to pay slips and tax files like returns and W2s, in the event you are expected to show proof of income to SSA.
