Do You Have Any Advice For Me?

Aug 29 2019 - 10:45am

I retired in July 2014 and receive a Federal pension (Dept of State, Foreign Service). I am under a program called the Foreign Service Retirement and Disability System Offset. (FSRDS Offset). Under that system, when I reached 62, my Pension was to be reduced by the amount I was authorized to get from SSA. So contacted SSA to apply for the benefits available to me at age 62 to avoid a reduction in my monthly income. When the State Department did not reduce my pension as expected, I found they had mistakenly put me under the wrong retirement system in 2003 and had not made the proper tax deductions between 2003-2013. I am now under the correct retirement system and corrected W2s were issued for 2003-13 and provided to SSA. But SSA had been providing me a benefit - of varying amounts before State Department made the corrections.. In January 2019, SSA sent me a letter telling me that my benefits were suspended pending review. State Department in March 2019 completed the process of reducing my pension by the amount I am due under SSA. That amount is $175/month. But SSA has actually paid me more than that each month to varying degrees - from approx $600 to $1200 a month.. There are so many layers to my issue and I really need some advice on what I should expect. I anticipate SSA will write to me and demand some sort of repayment, but my SSA correspondence never includes a full accounting of what my benefit was based on and I don't know my rights - since it was my employer's error. In addition, I'm not even sure if I'm actually under SSA now - and I turn 65 in a few months and wonder if this will affect Medicare. Thank you for any guidance you can provide. Maura

Hi Maura,

A key factor affecting your Social Security benefit rate is whether or not any of your government pension is based on earnings that were exempt from Social Security taxes. If your government pension is based in whole of in part on earnings not subject to Social Security taxes then your Social Security benefit will likely be lower than it otherwise would have been due to the Windfall Elimination Provision (WEP). WEP can cause an alternate, less generous, calculation formula to be used when calculating your Social Security benefit rate (https://www.ssa.gov/pubs/EN-05-10045.pdf).

Thus, if WEP was not considered when your benefit rate was initially calculated but should have been, there's a good chance that you were initially paid too high of a benefit rate and will be expected to pay back any resulting overpayment. In that event you could file an appeal if you disagree with the amount of the overpayment (https://www.ssa.gov/pubs/EN-05-10041.pdf). Or, if you're unable to repay the overpayment even in installments and you were without fault in causing the overpayment, you could apply for waiver (forgiveness) of the overpayment.

On the other hand, if all of the earnings on which your government pension is based were subject to Social Security taxes, then WEP would not affect your Social Security benefit rate. In that event, I doubt if you would have been overpaid by Social Security.

As long as you've applied for Social Security retirement benefits prior to age 65, Medicare enrollment at age 65 is automatic even if your Social Security benefits are in suspense. You should receive a Medicare card in the mail within a couple of months prior to your 65th birthday, but given the problems that you've experienced it would probably be a good idea to contact Social Security and make sure that your Medicare enrollment is still on track.

Best, Jerry