Your Benefits and You
Overpayment Penalty Hurts: When it Comes to Collecting Money, Social Security Has a Long Memory
Imagine owing $42,000 to Social Security!
Last month, I assisted an individual who had an overpayment for exactly that amount. This person incurred the overpayment after working for several years and not reporting any of his work activity to Social Security.
Over the past year, a dramatic increase in clients who have returned to work without notifying Social Security of their work activity has been seen by AIDS Project Los Angeles' Benefits Program. Typically, these work-related overpayments are very large, usually because individuals have worked for several years before Social Security realizes that an overpayment has occurred. While these overpayments represent a positive indication that many people are able to tolerate increased work activity, what the overpayments also represent is that many individuals do not understand their responsibility to report work activity to Social Security.
Reporting RequiredSocial Security regulations state that disability beneficiaries are required to report earned income and work activity. Social Security is actually able to track your work activity by scanning your Social Security number against Internal Revenue Services (IRS) tax records. If you do not report that you are working, Social Security will eventually detect unreported wages that show up on your Social Security number.
If you are someone who may be facing a work-related overpayment, understanding how to address the repayment process with Social Security is important. Not only should you understand how to protect any current benefits you may have, but you should also understand how to protect any benefits you may need in the future.
Notice MailedThe first thing that usually happens when an overpayment occurs is that you will receive a "Notice of Overpayment." When the overpayment is work-related, a breakdown of your reported earnings is included in the notice. If you disagree with any of the information Social Security is basing their decision on, you have the right to file an appeal. If you agree with the overpayment amount, then the next step is to begin repayment negotiations.
Social Security usually attempts to recover overpayments within 36 months. This is a "target" Social Security shoots for. Usually, if you are able to prove that repayment at this rate would cause you substantial hardship, Social Security is able to extend the recovery repayment period.
Individuals who are receiving Supplemental Security Income (SSI) are frequently able to negotiate very low repayment rates. This is because it is understood that SSI recipients have very limited income and assets. When you are negotiating a repayment rate with Social Security, always be sure to get the final agreement in writing.
If you are tempted to avoid repayment altogether, you may want to reconsider. Social Security has availed itself of several more aggressive recovery options. If you do not respond to their overpayment notice, you can usually expect that Social Security will automatically assess a repayment rate and begin deducting the amount directly from your monthly benefit check. If you are no longer receiving a benefits check, and you still have an unpaid debt to Social Security, the remaining amount can be taken from any federal tax refund that you may have accrued through your employment.
Social Security is allowed to use only IRS refunds to offset SSDI overpayment debts. This option is only available if you are: 1.) no longer receiving SSDI benefits, and 2.) refusing to make payments to Social Security.
Other TacticsIf, after all of this, Social Security still cannot get its money back, they have the option of going after your credit rating. In 1996, Congress granted Social Security permanent authority to report unrecoverable SSDI overpayments to credit bureaus. Your case can only be reported if your benefits have ceased. An automatic system selects which cases are to be reported to the credit bureaus. You should receive written notification prior to being reported and you have a right to an appeal if you feel the information being reported to the credit bureau is incorrect.
To say the least, the penalties for accruing employment-related overpayments can be financially inconvenient. If you feel that you may be subject an employment-related overpayment, seek the assistance of AIDS Project Los Angeles' Benefits Department or contact the biggest AIDS organization in your area. Click here to find an organization in your area. Benefits staff members are trained to assist you to understand your rights, advocate for solutions, and ultimately protect your future benefits.
Julie Cross manages AIDS Project Los Angeles' Benefits Program. She can be reached by calling (323) 993-1475 or by e-mail at email@example.com.
This article has been reprinted at The Body with the permission of AIDS Project Los Angeles (APLA).
This article was provided by AIDS Project Los Angeles. It is a part of the publication Positive Living.