Social Security has strict rules in place regarding how much a person who is collecting Social Security Disability Insurance (SSDI) benefits can earn from work-related activities. For the year 2018 anything earned from work totaling $1,180 per month and more, in gross income, is considered to be earning at a Substantial Gainful Activity (SGA) level, and a person earning this much from work is not entitled to disability benefits during this period of time, regardless of their impairments.
Some people who do receive SSDI benefits earn more than this amount because their impairments have improved enough or they were able to go back to work fulltime for a limited period of time before their disabilities prevented them from continuing to work. When a person who receives SSDI benefits, and earns work-related income over this amount, Social Security considers it an overpayment of disability benefits and wants to be repaid.
Many beneficiaries do not understand Social Security’s rules about work-related income and how it could impact their benefits, this is why Mathematica, a research group that studies disability policy, found that “71 percent of beneficiaries who were at risk were overpaid,” from 2010 to 2012.
Social Security allows beneficiaries a Trial Work Period (TWP), a specific amount of time where the beneficiary’s earnings do not impact their disability benefits, but if the work and earnings continue eventually an overpayment occurs.
Disability overpayments are not only problems for Social Security, which has future funding shortfalls, but also for the beneficiaries who receive them because Social Security demands overpayments be paid back from people with limited income who are typically going through financial hardships.
According to the policy report published by Mathematica, overpayments ranged from $831 million to $980 million from fiscal year 2010 through 2012.
Beneficiaries need to be aware that they must report work-related income to Social Security, but this problem is not on the beneficiaries alone, Social Security must do more to combat the problem as well. Social Security typically learns of a beneficiary’s earnings from the IRS, but by the time the agency receives the information, the worker has already racked-up a substantial overpayment bill.
The Mathematica report indicated that Social Security is not doing enough to inform beneficiaries of their income reporting requirements, which has led to many overpayments.
“A more concerted effort to improve beneficiary awareness of the earnings reporting requirements and processes has the potential to reduce the prevalence, duration, and size of overpayments. In addition, SSA access to a timelier source of earnings information than what is currently available from IRS data has the potential to reduce overpayments among those who do not report earnings,” the report said.
If beneficiaries are better informed it will reduce overpayments and reduce Social Security’s funding gap, but more importantly, it will limit a beneficiary’s exposure to having to pay back a substantial overpayment, which on average is between $8,000 and $14,000, according to the report.
