When you think of Social Security, the word "benefits" might come to mind. After all, the federal program exists to distribute benefit payments to individuals with disabilities, retirees, and their families.
But Social Security doesn't always give money; sometimes it takes away money. We're seeing the latter scenario unfolding in a major way right now. Social Security wants money back from potentially millions of Americans. Could you be one of them?
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Billions in overpayments
It's first important to understand which part of Social Security the administration is primarily trying to get money back from individuals. The federal program sends monthly payments to retirees, survivors of deceased workers, and workers with disabilities and their families. The Social Security Administration (SSA) wants money back mainly from some of the individuals in the last category.
The problem is that the program has overpaid significantly in some cases. At the end of fiscal year 2022, the SSA had a balance of $21.6 billion in overpayments that it had yet to collect. That total was after the agency recovered more than $4.7 billion in overpayments during the fiscal year.
That might seem like a huge amount. However, it's only a drop in the bucket in the big scheme of things. The SSA makes annual benefit payments of over $1 trillion. The amount of overpayments that it's seeking to claw back reflects only a tiny fraction of that total.
The SSA hasn't revealed exactly how many Americans have been inadvertently paid too much. However, The Urban Institute's Jack Smalligan recently told ABC News that he estimates that millions of people could be impacted.
Could you owe money to Social Security?
You're more likely to potentially owe money back to the SSA because of overpayments if you've received disability benefits in the past through the Supplemental Security Income (SSI) program. The rules for who can receive SSI benefits and how much they receive are complicated.
In particular, if your wages or the amount of assets you own increased while you received SSI benefits, you could be at a higher risk of being overpaid by the government. To receive SSI in 2023, your resources can't exceed $2,000 for an individual or $3,000 for a couple. These resources include money in bank accounts, stocks, bonds, property owned, and life insurance policies with a cash value of more than $1,500. However, they exclude your house (and the land it's on), one vehicle per household, and certain other assets.
The most important thing to know is that the SSA will notify you by mail if you have potentially been overpaid. If you receive a call, email, or text that you owe money, it's likely a Social Security scam.
What to do if you've potentially been overpaid
It could be distressing to find out that you could owe hundreds or even thousands of dollars to the federal government because of a potential overpayment. That's especially the case if you've already spent the money.
You should appeal the overpayment notice if you don't think you've been overpaid or believe that the amount of overpayment is incorrect. Appeals must be made in writing within 60 days of receiving the original overpayment notice. You can find Form SSA-561 online or call the SSA to obtain one.
If you believe that you shouldn't have to pay the money back even if you were actually overpaid, you can request that the SSA waive collection of the overpayment. You can file to request a waiver at any time if you don't think the overpayment was your fault, if repayment would cause you financial hardship, or if paying the money back would be unfair for another reason. Waiver requests must be made using Form SSA-632, which can be obtained online or by calling the SSA.
You also have options available for repayment. The SSA will withhold the amount that you owe from your Social Security or SSI benefits. You can request that the agency withhold a lower amount. If you don't currently receive any type of Social Security benefits, you can contact the SSA to set up a plan to pay back what you owe in monthly installments.
