3 Things To Know About Social Security Payments If You’ve Ever Been on a Payroll
If you’ve ever gotten a paycheck, you probably noticed that some of it went toward Social Security taxes. Currently, 6.2% of your pay is deducted for Social Security taxes on yearly earnings up to $168,600. What you might not know is that inaccurate payroll information can lead to Social Security overpayments when you start receiving benefits — and if you are overpaid, you’ll have to pay it back whether it was your fault or not.
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The Social Security Administration aims to address that problem through a proposed rule announced last week. The rule, called “Use of Electronic Payroll Data to Improve Program Administration,” is designed to reduce improper payments — including overpayments.
Here are three things to know about Social Security payments and why the rule has been proposed:
Payroll earnings that go unreported or are incorrectly reported or reported late often cause overpayments for people who receive Social Security Disability Insurance benefits and Supplemental Security Income payments, according to the SSA.
When an overpayment happens, the SSA is required by law to ask for repayment.
Some repayments have run into thousands of dollars, which creates a lot of financial stress for seniors and others who already have a hard enough making ends meet.
The SSA hopes to reduce wage-related improper payments by using its legal authority to establish information exchanges with payroll data providers. The exchanges are designed to help ensure that the agency gets timely and accurate wage data. These exchanges and the agency’s planned business process fall under the banner of the Payroll Information Exchange.
The PIE is expected to help reduce manual reporting errors. In addition, it should relieve the reporting burden for individuals who authorize Social Security to obtain their wage and employment information through information exchanges and who also work for employers whose payroll data is available through the exchange. Another benefit of PIE is that it should speed up the process of identifying wages that often go unreported or undetected.
“Social Security is taking a critically important step to reduce improper payments, including overpayments, by ensuring we receive timely and accurate wage data,” Social Security Commissioner Martin O’Malley said in a Feb. 15 press release. “These automated payroll information exchanges will address the inefficiencies associated with self-reporting and manual verification by introducing a more streamlined approach.”
The exchanges also will “prevent inequities caused by improper payments by enabling Social Security employees to adjust SSI payments before they are issued and help us more efficiently administer SSDI,” O’Malley added.
You can read the notice of proposed rulemaking here. You can provide comments on the notice until April 15.
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