Last month, we wrote about a specific kind of mistake being made by the Social Security Administration (SSA) that is costing many vulnerable Americans significant consequences. Specifically, the SSA has overpaid thousands of Social Security Disability (SSD) benefits recipients and has then insisted that these beneficiaries repay the overage amounts. In some cases, the SSA has demanded the repayment of thousands upon thousands of dollars.
To the casual observer, this kind of mistake may not seem like cause for much concern. After all, if beneficiaries were being paid more than the system warranted, it should be easy for them to pay the benefits back, right? Actually, most SSD beneficiaries struggle to pay all of their care-related expenses even with the help of SSD benefits. As a result, paying back mistaken overage amounts can be extremely difficult. These mistakes can also have other financial consequences for recipients as well.
For example, CNN recently published a piece online profiling one SSD beneficiary whose benefits were overpaid. The 33-year-old vet that CNN profiled is an amputee who reported his income to the government as soon as he was able to start working again after he lost his leg during the Iraq war. His benefits stopped as expected after his nine-month transition period. However, a complex series of events led his benefits to be reinstated erroneously. He is filing appeals to have the benefits properly dealt with, but in the meantime he has been compelled to pay $23,000 in income tax on the erroneously granted benefits he has returned to the government.
This story illustrates that the repayment scandal is not just affecting beneficiaries whose benefits did not cease at the proper time but also those who have been erroneously paid in other ways. The tax consequences of the SSA’s mistake are actively harming individuals who have already struggled to deal with costs associated with debilitating conditions. It is a frustrating and unacceptable situation that will hopefully be solved urgently.