Getting an overpayment from Social Security for a miscalculation may sound like a good deal, but it can be very costly if you don’t follow the correct procedures. As Forbes recently reported, one unlucky woman had to pay back more than $300,000 of hers because of a Social Security mistake.
See: Can I work full-time if I get Social Security at age 62?
Search: If a recession is looming, make these three retirement moves to get back on track
Found: All States That Don’t Tax Social Security
Social Security overpayments are more common than you might think and can occur for a number of reasons. Benefits are often overpaid if the agency is unable to calculate your benefits accurately. This can occur if you are not
However, as Pine Tree Legal Assistance points out in their blog, overpayments can occur due to administrative errors on the part of SSA, such as failing to notify beneficiaries of certain reporting requirements.
When SSA discovers that a beneficiary has been overpaid, it sends out a “clawback” bill in the form of an overpayment notice, according to Lawrence Kotlikoff, a financial writer and professor of economics at Boston University. This can happen long after the mistake has occurred.
“In almost all cases, repayment demands are the result of Social Security miscalculating the beneficiary’s correct benefit amount years or decades ago,” Kotlikov wrote in his Forbes column. increase. “But Social Security’s fault is your fault. If you’re extremely poor, they may choose to make you pay the overpayment. Otherwise, tough luck.”
He owed $300,000 for an overpayment of one disabled woman who was deemed “too wealthy to qualify for relief” by a Social Security administrative law judge. Quoted.
If you receive a letter from SSA stating that you received more money than you need, you must pay it back within 30 days. SSA will wait at least 35 days (including 5 days by email) from the date of overpayment notification before initiating the collection process. If you submit your request for waiver or reconsideration before 30 days have passed, SSA will not begin collecting any overpayments until a decision is made on your request.
Pine Tree Legal Assistance recommends that you first read the overpayment notice carefully to ensure that the information, amount and date are correct. Then below are some options.
ask rethinkThis is an appeal indicating that you would like SSA to reconsider your case. If you believe that the overpayment amount was incorrect or the reason for the overpayment provided by SSA is incorrect, you should request a reconsideration.
ask for exemptionEven if you agree that you overpaid, you can still ask SSA to waive the payment. If you don’t think the overpayment was your fault and/or you can’t afford to pay the money back, ask for a waiver.
ask for payment arrangementsThis option can be used if you think the overpayment was your fault and you can afford to pay it back. Payment arrangements allow you to pay back your money a little at a time. Amounts are based on the amount of income needed for basic necessities.
One thing you don’t want to do is put aside the notice after you receive it. It’s important to act quickly to get started. Again, you must respond within 30 days from the date of the notice, not the date you received the notice.
If you have any questions about this notice, please call SSA at 855-807-8807 (TTY 800-325-0778). You can also make a payment online at pay.gov if your overpayment notice includes an online payment method and a remittance ID.
Take our survey: How much signup bonus do you need to change banks?
Learn: 11 Social Security Mistakes That Could Cost You Big Money
If you wish to reduce your monthly payments, please complete the Overpayment Recovery Rate Change Request (Form SSA-634) and fax or mail the form to your local Social Security office. If you can’t afford the money and believe the error wasn’t your fault or was unfair for some other reason, visit SSA’s Abandoned Refunds page.
Learn more about GOBankingRates
This article originally appeared on GOBankingRates.com: Social Security: ‘Clawback’ bill tied to administrative error cost one beneficiary $300,000 — what you need to know thing