Anybody who has applied for Social Security benefits knows that the system’s regulations are complex. Unfortunately, many employees of the Social Security Administration (SSA) find them confusing as well, and as a result, they sometimes make mistakes that lead to lost benefits for eligible beneficiaries.
In November, the SSA Office of the Inspector General reported on audits that revealed that that some Social Security beneficiaries had not been receiving benefits they are entitled to. I’ll focus on two such situations.
The first is individuals who applied for their Social Security benefits prior to their full retirement age (FRA) and had their Social Security benefits reduced because they earned more than specified minimum income levels.
For example in 2020, your Social Security benefits would have been reduced $1 for every $2 you earned more than $18,240. However, according to Social Security regulations, after you reach your FRA, SSA recalculates your benefit amount to give you credit for the months it reduced or withheld benefits due to your excess earnings.
The audit report showed that 7,477 beneficiaries who had monthly benefits reduced for work after January 2000 did not receive a benefit adjustment after they reached their FRA.
If your benefits were reduced because you applied for Social Security benefits prior to your FRA, you should determine whether or not your benefits have been adjusted properly. If that is the case, contact the SSA and ask that you receive the proper adjustment. Refer to audit A-09-18-50685.
The second type of case is individuals who may be eligible for a survivor benefit but were subject to a government pension offset (GPO), which reduces survivor benefits for employees who were eligible for a pension from work not covered by Social Security.
If you receive a pension from a federal, state or local government based on work not covered by Social Security, your government pension may reduce your Social Security benefits. Such pensions also reduce or offset Social Security spousal benefits, such as survivor benefits. The amount of the reduction a survivor benefit is two-thirds of the government pension.
You are eligible for a Social Security survivor benefit as early as age 60. If you apply for a survivor benefit at age 60, or any time prior to reaching your FRA, an SSA representative must explain the advantages and disadvantages of filing an application, so you can make an informed decision. Although you may not be eligible for a survivor benefit at 60, or a reduced benefit, your SSA representative should inform you that if you wait until your FRA, you may be entitled to a larger survivor benefit.
Unfortunately, the audit found insufficient evidence that SSA had properly informed claimants of their option to delay, or withdraw and resubmit their application for a survivor benefit, as required. The audit estimated that 1,938 widow(er)s would have been eligible for approximately $12.8 million had they delayed their application up to their FRA. In addition, 1,615 could receive approximately $42.6 million in additional benefits over their life expectancies. On average the audit showed that each widow(er) could receive an additional $26,400 in benefits.
The audit report suggested that SSA representatives should notify individuals of their option to withdraw their application, if eligible, and re-apply for survivor benefits later. According to Social Security regulations, you can withdraw your survivor application and reapply later as long as it hasn’t been longer than one year since you applied. Don’t wait to hear from an SSA representative. If you applied less than a year ago, discuss with an SSA representative whether it will benefit you to withdraw your application and reapply later.
If you haven’t applied for survivor benefits because of the GPO offset, I recommend that you contact the SSA to discuss the advantages and disadvantages of filing for a survivor benefit. Refer to Audit A-09-19-50791.