Chris Stein, CFP®
What You Should Know About Social Security Benefit Errors
With over 59 Million Americans receiving some sort of Social Security benefits it is not surprising that occasional errors occur. So what happens if Social Security makes a benefit error and pays you the incorrect amount?
They’ll Notify You
If Social Security discovers they have made a benefit error and paid you too much they will first notify you in writing where they will explain why you were overpaid, your options to repay, and your rights to appeal or waiver. You have 60 days from the date you received the original notice to file the appeal. If you choose to appeal you will use form SSA-561 on which you will explain in writing why you think you have not been overpaid or why you think the amount is incorrect. If you believe you should not have to pay back the overpayment you can request the SSA waive collection. There is no time limit to file form SSA-632 where you will request a waiver so you do not have to pay, but they will only grant this waiver if the overpayment was not your fault AND paying it back would cause financial hardship. They will generally ask for more information about your situation or ask to meet in person before approving a waiver.
Options for Repayment
If the overpayment is valid and you are not applying for appeal or waiver you will have a few choices of repayment. If you do not pay the full amount within 30 days they will begin to withhold ALL of your benefit payment until the overpayment is satisfied. This is assuming you are NOT receiving SSI. SSI overpayments are repaid in small amounts over longer periods instead. If you are not receiving benefits you must either pay the full amount within 30 days or contact the SSA to set up a payment plan. If you are not receiving benefits and do not pay back the debt, the SSA can recover from your federal income tax refund, from your wages if working or from future SSI or Social Security benefits. They will also report the delinquency to the credit bureaus.
You Need to Notify Them
Sometimes Social Security will discover they have made a benefit error and under paid you. More often you will have to be the one who determines there has been an underpayment and go to Social Security to request a remedy. Underpayments generally occur if the SSA is not notified of some event that increases your benefit, there is an error setting up your initial claim, or when you later become eligible for a larger benefit after you earlier were claiming another, lesser benefit. In a recent audit of SS records it was found that over 30,000 Americans have been underpaid benefits due to the third reason listed.
Visit Your Local Social Security Office
If you identify a SS underpayment you need to notify them. There are specific forms for reporting specific errors so it is best to start by visiting your local SS office to discuss the error you have discovered. If it is simple and obvious they may be able to fix the issue on the spot. Other issues may require written explanation or even a hearing. If the SSA agrees there is an underpayment they will pay most claims in a lump sum amount. If you are unable to convince them you were underpaid you will probably want to enlist legal advice on how to combat them if the amount is substantial and you are confident you are correct.
Errors do happen so it is important you review your Social Security records and benefit payments periodically to make sure you are getting what you deserve.
For more information on this topic, please use the play button below.
Podcast: Play in new window | Download