Social Security overpaid a woman by $35,000. Now the agency wants its money back — pronto.
More than 75 million Americans rely on Social Security checks each month to help them get by. But sometimes recipients get a financially painful surprise: a notice from the Social Security Administration that their retirement or disability benefits were overpaid — often by thousands of dollars — and that they need to repay the money. Fast.
That’s what happened to one Social Security recipient in her mid-seventies who was recently told she owes the agency $35,000. She isn’t alone: The agency sends millions of overpayment notices to beneficiaries each year.
Even if the overpayment is the agency’s fault, the recipient is still on the hook for repayment.
The woman spoke with CBS News on the condition of anonymity out of fear of retribution from the agency as she navigates an appeal process.
The bad news started earlier this year when her monthly benefit check was suddenly reduced in February by about $600, leaving her with around $2,700 per month after taxes, voluntary withholding and Medicare deductions.
“I started calling Social Security to figure out what happened and [to share] why I was upset about it,” she said.
According to a copy of a letter the agency sent the woman that was viewed by CBS News, the Social Security Administration reduced her monthly payment “to correct [her] benefit amount.” No other explanation was provided, the woman said.
Then came an even bigger shock: The Social Security Administration sent a notice in August informing the woman that she owed tens of thousands of dollars. The agency said it had been overpaying her for the past four years, which coincides with the timeline for when she started claiming her own benefits.
She said the agency has not provided an explanation for why it overpaid her. As far as she knows, she didn’t do anything wrong.
In the letter, Social Security informed her that she had 30 days to repay the full balance. If she couldn’t, the agency would reduce her benefits by 50% for two years starting in December to recover the overpayment, leaving her with around $1,350 a month.
“I’m alarmed,” she said, adding, “I’m trying to sort out what I should do next at this point because I was already underway with a plan.”
The Social Security Administration didn’t immediately return a request for comment.
Why does SSA issue clawbacks?
So-called clawbacks occur when the Social Security Administration overpays beneficiaries and then requests the money back. Last year, the agency told CBS News’ “60 Minutes” that it sends overpayment notices to roughly 2 million people a year across its benefit programs.
According to Social Security’s website, overpayments occur “because of missing or wrong information.” That can happen if people fail to tell Social Security about changes that could affect the agency’s benefit calculation, such as changes to their income or marital status.
Even if people do report the changes, they may still unexpectedly find themselves on the hook for overpayment, said Nancy Altman, the president of the advocacy group Social Security Works.
“SSA is so understaffed that even when people do report changes in a timely manner, they don’t always get inputted in time to stop an improper payment,” she said in an email. “That means someone could get overpaid for several months, without their knowledge.”
One of the most common reasons for overpayment is that beneficiaries who claim Social Security before they reach their full retirement age — 67 for people born in 1960 or later — face an income cap, said Martha Shedden, the president of the National Association of Registered Social Security Analysts. Earning above that threshold can reduce the Social Security benefits they are entitled to receive, potentially leading to overpayment, she said.
“That can go unnoticed due to a delay in the earnings being reported to the SSA,” she told CBS News in an email.
In other cases, it boils down to number-crunching mistakes. Sometimes the agency miscalculates the person’s original benefit, Shedden said. Errors can also crop up for people who receive more than one type of Social Security benefit, Shedden added.
People are still required to repay the agency, even if it’s not their fault. Altman said the best way to address this issue would be to change the law.
“When an overpayment is made through no fault of the beneficiary, the government should absorb the cost,” she said.
Whatever the cause, overpayments can stretch back years before people are notified, as was the case with the woman who spoke with CBS News on the condition of anonymity.
The Social Security Administration gives recipients 30 days to repay the agency. If the person does not take steps to challenge the overpayment, the agency automatically withholds 50% of the person’s Social Security benefit or 10% of their Supplemental Security Income until it’s repaid, according to its website.
What should I do if I find myself in this situation?
While receiving an overpayment notice can be a shock, experts say Social Security recipients have options and shouldn’t panic.
“People should understand that an overpayment notice is a determination by Social Security, not the final word,” Shedden said. “SSA can make mistakes, and beneficiaries have the right to challenge both the existence of the overpayment and the amount.”
While making a field office appointment may be difficult due to understaffing, recipients can try calling the agency directly for information, Altman said. If the agency doesn’t respond, they can contact a member of Congress, who may be able to elevate their case, she added.
If recipients want to challenge the overpayment, they have two options.
They can file an appeal saying that they disagree with the overpayment amount or the assertion that they were overpaid at all. People have 60 days to file the appeal, called a Request for Reconsideration (Form SSA-561-U2). However, they must file within 30 days for Social Security to pause collection.
If the person cannot afford to repay the amount they allegedly owe, believes the overpayment was not their fault or feels the request is unfair, they can submit what’s called a Request for Waiver of Overpayment Recovery (Form SSA-632-BK) asking the agency not to collect. That can be filed at any point.
Recent data on the approval rate for these waivers is scarce. A 2015 Office of the Inspector General report found that approvals can vary drastically from state to state, with some field offices approving 96% and others approving 30% or less.
Given how cumbersome the process can be, experts advise people to turn to legal aid groups or Social Security specialists for assistance.
“The most important action is do not delay, and if a deadline has passed, people should still file the appropriate forms and make sure everything is in writing, including logging calls, saving emails and copies of SSA forms, etc.,” Shedden said.
The woman who spoke to CBS News is now working with an advisor to navigate the appeal process, which is keeping Social Security’s collection process on pause. But that’s providing little relief as she tries to plan for her future.
She told CBS News that she started reducing her workload around six months ago, confident that her savings and Social Security benefits would cover her expenses. But that’s all up in the air now.
“Now I’ve lost income. Now they want money back,” she said, adding, “I don’t know what my retirement, if I go forward with it, what it looks like.”
