Bamboozled: Social Security horror story

After receiving Social Security disability benefits for 10 years, the payments have stopped coming to Angelina Maria Colabella.BB branding

It’s not that the West Paterson woman’s medical condition has changed. Or that she slacked off on paperwork. She hasn’t gotten a full-time job or married a millionaire, nor has she hit the lottery.

Why no more checks? The Social Security Administration said it overpaid her nearly $59,000 over the past 10 years, and she has to pay it back.

THE NOTIFICATION

Colabella, 58, received a letter from SSA dated March 10. It said:

“We are writing to give you new information about the disability benefits which you receive on this Social Security record,” it said. “We will tell you how we paid you $58,935.30 too much in benefits.” The letter said she had 30 days to repay the money.

51110“I started to cry,” she said. “I thought it was a mistake.”

But it may not be a mistake. Colabella has had a part-time job for years. Most of the time, she didn’t earn enough to go over the maximum earned income permitted before Social Security/Disability benefits would be affected, she said. Once in awhile she worked slightly more, she said, because her employer would ask her to fill in for sick co-workers. She said it was never for an extended period of time, but for a few hours here, a few hours there.

When she did go over, she’d discuss it with Social Security, she said, and then modify her hours accordingly.

Upon receipt of the letter, Colabella went into panic mode and called her daughter.

“Gee, just let me get my change purse out so I can give you that 58 grand,” said Colabella’s daughter Allyson Leonard, who stepped in to help her mom.

They contacted Bamboozled for help.

RULES AND WORK HISTORY

We gave Social Security a ring to fully understand how part-time work can affect Social Security disability benefits. The agency couldn’t discuss the specifics of Colabella’s case, but it offered to chat about the rules in general.

Overpayments typically happen when someone receives benefits they aren’t due, said SSA spokesman John Shallman.

The rules are somewhat complicated. The disability program is designed to get people back to work. Beneficiaries have a nine-month trial period during which they can work and earn any amount without benefits being affected.

Then there’s an additional three-month period. During this time, if you earn more than the maximum, called “Substantial Gainful Activity,” or SGA, for the month, benefits should be suspended — not terminated — for that month. (In 2010, the SGA was $1,000.)

If you do earn more than SGA for the month, you’re supposed to contact Social Security and tell them not to pay you that month. If in the next month you earn less, you’re again supposed to contact Social Security to tell them to reinstate the benefits check.

After that, beneficiaries have another 36 months — an extended period of eligibility — in which they may earn any amount, but if they earn more after that, they’re supposed to notify Social Security to suspend that month’s payment.

At the end of the 36-month period, benefits are terminated for good after a beneficiary earns more than the maximum amount in one month. If the beneficiary never makes the maximum before, during or after the extended 36-month period, benefits would continue as normal.

The idea is to keep people in the system in case it’s determined someone returned to work prematurely. Benefits can then be restarted without a huge amount of paperwork.

The onus is on beneficiaries to notify Social Security if they go over SGA. “They’d need to contact us every month and show the pay stubs,” Social Security’s Shallman said. “If they don’t and we continue to pay disability benefits, they’re overpaid.”

That makes perfect sense. No beneficiary should receive payments for which they don’t qualify.

But our question to Social Security: Even if a beneficiary goes over the permitted earned income level and is overpaid by Social Security, how could the agency overpay someone nearly $59,000 before it notices something’s amiss?

WHAT’S NEXT

In Colabella’s case, it’s not clear that she’s in the wrong.

According to her 2008 tax return, Colabella earned $10,774 from her part-time job. The 2008 SGA was $940 per month, so it would appear Colabella earned less than the limit. Same for 2009. In that year, Colabella had $9,860 of earned income The SGA was $980 per month that year, so it again appears Colabella would be under the limit.

She has some recourse.

This morning, Colabella is scheduled to meet with her local Social Security office to go over her records and work history. She hopes Social Security will determine the “overpayment” is a mistake. If not, though, she has some options.

During her meeting, Colabella will request a reconsideration, which essentially tells Social Security it has the facts wrong and a review would occur. If the reconsideration determines she does owe the money, she can ask for a waiver.

“If repayment at even modest recovery rate will be a hardship, we need to see that in black and white,” Shallman said, speaking hypothetically. “We need to see what the bills are and what you have.”

If Colabella is still not satisfied with the outcome, she can request a hearing before an administrative law judge.

If it’s determined she does need to repay the funds and the 36-month collection period is not feasible, she may be able to cut another deal.

Colabella doesn’t think she earned enough to owe anything, and if she does, she’s not sure how she can pay — even as part of a payment plan. She now only works 10 hours a week at $8.76 an hour, and she has regular living expenses plus medical bills from a recent hospital stay she said she hasn’t started to pay.

She knows some taxpayers will read her story and say they don’t want to pay for her benefits if she wasn’t eligible for them. But she says if there was an overpayment, it wasn’t her error.

“It was their mistake. I don’t think it’s fair for them to ask me to pay it back because I don’t owe it,” she said. “As far as I know I wasn’t earning more than I was supposed to.” We’ll let you know what happens at the meeting. Stay tuned.