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SSA overpayments can mean headaches, financial hardship

Once a person is approved for Social Security disability benefits or Supplemental Security Income benefits, the Social Security Administration determines how much to provide that person each month. Though the SSA says that more than 99 percent of its monthly payments are accurately calculated, mistakes do occur.

Sometimes, this results in a recipient being overpaid. At first, this may seem like a good thing -- most families with a member receiving disability benefits could always use more money. But then, the SSA comes seeking the money back. And that could be a big problem.

Even reporting the overpayment does not always solve the problem quickly. One military veterans began receiving SSD benefits after being wounded in Iraq. In 2009, he was able to return to work and informed by SSA. The payments stopped after the usual trial period.

But then in July, the SSA unexpectedly deposited $75,000 into his bank account. The SSA mistakenly believed that it owed him the money because he had not been gainfully employed for three years.

Giving the money back turned out to be a hassle. It also meant a bigger income tax bill for him, because he was charged for “income” that never was rightfully his.

The consequences of these errors can affect you the rest of your life. The parents of two autistic children will have to pay the SSA $50 per month for 30 years due to an error made by the agency.

After her husband got a raise at work, the boys’ mother reported the increased income to the SSA, believing that the family no longer would qualify for SSI benefits and that they had been overpaid $8,000. But then the agency told her that the family should never have been awarded benefits in the first place. Their bill: $20,000 in benefits that had largely been spent long ago.

Source: CNN Money, “’I was overpaid by Social Security’,” Blake Ellis, Oct. 28, 2013

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