What Social Security Offset Is and How It Can Ruin Your Retirement

As you reach retirement age, you may be looking forward to a change of pace. However, you may be shocked to find that your Social Security benefits are lower than you thought.

If you owe a government related debt, the Treasury can offset up to 15% of your benefit.

What Is Social Security Offset?

Administrative offset is allowed against Social Security benefits,  notwithstanding the general protection from assignment and execution that these benefits enjoy. However, the amount that can be offset is limited by statute. Although the statute, as opposed to the regulation, does not explicitly exempt SSI benefits from offset, at current benefit levels SSI benefits (a maximum of $735 per month for an individual in 2017) will always fall below the statutory $9000 threshold for offset.

Who Does It Affect?

The Social Security offset affects anyone who owes the government a debt.  Many common debts include those for an SBA loan, debts owed to the Department of Defense, debts owed to the Department of Housing and Urban Development (HUD), as well as other government agencies.

O and WEP don’t affect other benefits like Medicare. You don’t have to get benefit payments through your spouse to get Medicare through them.

Also, you can still get full Social Security benefits if you didn’t work as a public employee. As long as you paid the FICA tax or had it deducted from your paycheck, that covers you.

The FICA tax is how you pay into Social Security when you work. If you do that, you can get the full benefits when you retire.

What Does It Do?

Social Security offset can lessen the amount of money you receive as Social Security benefits.  The offset amount will be applied to your government debt.  The amounts recovered will first go to pay administrative costs, penalties and the like and then towards your principal.

How Can It Ruin Retirement?

The Social Security offset and similar programs can ruin your retirement in a couple of ways. Luckily, understanding how it can ruin your retirement can help you plan ahead while you’re still working.

The biggest way that Social Security offset can ruin your retirement is that it can lower your income.

If you expect to make a certain amount and don’t account for the offset, you might be in for a rude awakening.

You might plan your lifestyle based on what you expect to make. Not receiving that in Social Security can affect everything from your housing budget to the amount you can spend on food or travel.

A law firm can help you understand the regulations, and they can help you determine whether you could face offset or not and what to do if you receive a notice of an offset.

Then, you can plan for an offset and how to fight it.

Are There Exemptions?

Offset against Social Security benefits is limited to 15% of the “monthly covered benefit payment.”  Furthermore, $9000 per year ($750 per month) is exempt.

In determining whether any portion of benefits is available for offset, amounts already being deducted to repay overpayments are not counted as received by the debtor.  The amount of Social Security benefits available for offset is also reduced by any Medicare insurance premiums that are deducted from your Social Security check.  Thus, if your $850 monthly Social Security benefit amount is reduced by a $45 monthly Medicare premium and a $50 monthly deduction to repay an overpayment, leaving you with a $755 monthly check, only the amount in excess of $750—in this example, $5—will be available for offset. Courts have declined to consider reduction of the amount of the offset due to hardship.

If you are subject to an offset or received notice as to a pending offset, contact a lawyer for help with your case. Then, you can make sure you get the full benefits that you deserve.

Do You Need Help With The Social Security Offset?

Navigating social security and retirement can be difficult, especially if you’re facing a social security offset.

Luckily, a lawyer can help you figure out what applies to you and what doesn’t. Schedule a consultation to get the help you need.