Social Security Benefits Subject to Offset to Collect Non-Tax Federal Debts
The U.S. Department of Treasury and Social Security Administration are working together to collect non-tax debts owed the U.S. Government. People who owe a non-tax debt to the U.S. Government are subject to actions to collect the money. They can have their Social Security retirement or Social Security disability benefits reduced to pay the non-tax debt. Supplemental Security Income (SSI) benefits will not be effected by the offset.
Repaying non-tax federal debt from Social Security benefits is required under the Debt Collection Improvement Act. Some Black Lung benefits and Railroad Retirement benefits can also be reduced. It can be used to get money back from a food stamp overpayment, collect money for a federal student loan or defaulted federal mortgage. The U.S. Treasury will send notices to persons who may owe the debt. The federal agency that is owed the debt should also send a notice.
The person on Social Security will then have to decide how to pay the federal agency. It is important to note that the beneficiary who gets the notice will need to contact the federal agency to which they owe the debt, not the Social Security Administration. If someone believes they do not owe the debt, they should file an appeal with the federal agency at the time the debt is established. No appeal rights will rest with the Social Security Administration over the proposed reduction.
The most that can be withheld from a Social Security beneficiary's check is 15% after any deductions required by law authorizing the reduction, such as medical premiums. The first $750 of monthly benefits is protected. The amount to be withheld each month until the debt is paid will be the least amount of the three figures:
- the amount of the debt;
- the amount of the monthly benefit that exceeds $750; or
- 15% of the monthly benefit.
For example, suppose someone on Social Security has a monthly benefit of $850 and owes $125. Looking at the three items above, the three amounts would be:
- the debt is $125.
- the monthly benefits exceeds $750 by $100 ($850 - $750 = $100)
- $850 x .15 = $127.50
Since number 2 is the smallest of the three numbers, that is how much would be withheld each month until the debt is paid in full. After the first payment of $100, the next month the remaining amount due of $25 would be withheld.
You may be an Iowan who gets a notice that your Social Security benefits are being offset because of a debt. You can contact your local Legal Services office if you want help. You can also contact the agency which says that you owe the debt to see if you can work something out.
Iowa Legal Aid provides help to low-income Iowans.
To apply for help from Iowa Legal Aid:
- Call 800-532-1275.
- Iowans age 60 and over, call 800-992-8161.
- Apply online at iowalegalaid.org
If Iowa Legal Aid cannot help, look for an attorney on “Find A Lawyer” on the Iowa State Bar Association website iowabar.org. A private attorney there can talk with you for a fee of $25 for 30 minutes of legal advice.
As you read this information, remember this article is not a substitute for legal advice.