Social Security’s new (old) overpayment rule

Last spring, 60 Minutes did a report on the Social Security Administration (SSA) that caused the SSA to change the way it recoups money when people are overpaid. That rule was just changed back to the traditional repayment schedule. Starting April 1, 2025, if you are overpaid, the SSA will stop all future payments to you until your debt is repaid.

For people who are put into dire financial crisis when their monthly Social Security checks stop, it is possible to file Form SSA-634-BK and plead your hardship. For those who can afford to pay the government back, but need a less stiff repayment plan, they can file Form SSA-634 to ask for an exception.

So how do people end up in an overpayment situation? First and foremost, by not taking the time to learn the rules surrounding the type of Social Security benefit you are receiving. It’s work. No one is here to spoon-feed you the information. The most common mistake happens when people file to draw Social Security earlier than their Full Retirement Age (a sliding scale based on the year you were born, but not later than age 67).

If you want to draw your Social Security this year, and you are 62 to 66 years old, you can only make $23,400 in gross, annual wages. This is called your earned income limit. It only includes wages from a job or net income if you are self-employed. Your Social Security benefit, pension, interest, dividends, capital gains, lottery winnings, rental income, and all other sources of Passive Income are excluded. Only your Active Income in limited. The income limits go away at your Full Retirement Age.

Avoid problems by NOT applying for Social Security when you are under your Full Retirement Age and plan to work full-time. Immediately report a change in income to the SSA to avoid getting into an overpayment situation. Yes, even those on Social Security Disability Insurance (SSDI) are allowed to work a little. Exceeding their income limit will cause their SSDI benefits to stop!

The problems at the SSA are well known. They expect to cut 7,000 workers and they have been at their lowest staffing in the past decade. They stopped walk-in appointments unless it is an emergency. It can take months to get a scheduled appointment. They often give out incorrect or incomplete information requiring you to go back several times. The biggest complaint is that wait times when calling the national number can be up to several hours!

Do your research. Take responsibility for learning about your benefit qualifications and rules. Yes, the government could do a better job, but let’s each of us do a better job of managing our benefits, too.

People say that clawing back 100 percent of an overpayment is cruel. But do you want the government to be in the business of giving out interest-free loans when people were overpaid by the SSA? Maybe it’s time for 60 Minutes to do another special.

Sylvia A. Gordon, JD is known nationally as “Medicare Mama” to over one million followers on social media. She has 30 years’ experience in Medicare insurance. Her family has helped tens of thousands of retirees across the nation. Find her book, “Medicare Mama’s Guide to Medicare and Social Security Retirement” on Amazon, Kindle, and Audible.