How To Appeal A Social Security Claim That Has Been Denied
Almost half of all Social Security benefit applications are denied. While the vast majority of these deal with disability benefits, sometimes retirement benefits are denied as well.
Some of the reasons why a retirement benefit application might be denied include:
- You have not accumulated enough work credits in your work life
- Your application has missing or incorrect information
- You submitted your application too early. You cant apply until about four months before you turn 62.
- You are already receiving Social Security disability benefits. Retirement and disability payments serve the same purpose to provide financial security when a person is not able to work any longer.
- If you are a surviving spouse, you do not meet the minimum age requirement or you got remarried before you turned 60.
If your benefit application is denied, you must submit an appeal within 60 days after you get a written notice from SSA. To start the appeal process, complete Form SSA-561-U2 Request for Reconsideration. Explain your reasons for seeking reconsideration and submit any additional documentation that will help you make your case to Social Security officials.
The Request for Reconsideration is the first of four possible levels of appeal for Social Security retirement benefits. It is an informal review of your application and in many instances, when new information is submitted or issues are clarified, this level of appeal can lead to a reinstatement or approval of benefits.
Beware The Social Security Earnings Test
Bringing in too much money in earned income can cost you if you continue to work after claiming Social Security benefits early. With what is commonly known as the Social Security earnings test for annual income, you will forfeit $1 in benefits for every $2 you make over the earnings limit, which in 2021 is $18,960. Once you are past full retirement age, the earnings test no longer applies, and you can make as much money as you want with no impact on benefits.
Any Social Security benefits forfeited to the earnings test are not lost forever. At your full retirement age, the Social Security Administration will recalculate your benefits to take into account benefits lost to the test. For example, if you claim benefits at 62 and over the next four years lose one full years worth of benefits to the earnings test, at a full retirement age of 66 your benefits will be recomputed — and increased — as if you had taken benefits three years early, instead of four. That basically means the lifetime reduction in benefits would be 20% rather than 25%.
Survivor And Death Benefits
Wage earners depend on Social Security retirement benefits to help meet financial needs when they stop working, but sometimes these earners can pass away early and unexpectedly. When workers pay into Social Security, a majority goes to fund disability and retirement costs, but a portion of their taxes go toward survivors benefits as well.
When a worker passes away, some family members may be eligible for survivors benefits if the worker earned enough credits during their working lifetime. Eligible family members include widowed spouses who are 60 or older, 50 or older if they are disabled, or any age if caring for a child who is under 16 years old. Children of deceased workers are also eligible if they are not married and under 18 years old, or under 19 years old but still in school. If youre divorced and you or your spouse pass away, the surviving spouse could be eligible for a widows benefit as well.
If a worker has enough work credits when they pass away, Social Security will also make a one-time payment of $255. This payment can be made only if the spouse or child meet certain specified requirements.
To apply for survivors benefits, Social Security will need the following, either original copies or certified copies, from the issuing agency.
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You Came Up Short On Credits
In order to receive Social Security payments, you have to first work for a certain amount of time, pay taxes into the system and build up enough credits to qualify for benefits. In 2021, you get one credit for every $1,470 in income earned, up to one credit per quarter or four credits per year. Most people must have 40 credits to receive Social Security benefits, which means you have to work for 10 years before youre eligible.
Will A Government Pension Impact My Retirement Benefits
If you worked for an employer that didnt withhold FICA taxes from your salary, such as a government agency, the pension you receive based on that work may reduce your Social Security retirement benefits. This reduction, as part of the windfall elimination provision , affects individuals who earned a pension in any job where FICA taxes werent paid and who worked in other jobs long enough to qualify for Social Security retirement benefits.
In addition to a reduction in individual benefits, spousal and/or survivor benefits may also be reduced accordingly. In this case, Social Security benefits will be reduced by two-thirds of the government pension.
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Social Security Disability Benefits Increased
Social Security Disability Insurance is an insurance program in which workers can earn coverage for benefits by paying Social Security taxes through their paycheck. The program provides income for those who can no longer work due to a disability, to help replace some of their lost income. Most years payments increase only increase slightly, however, the 9.6 million Americans who receive Social Security disability benefits will be pleased to learn 2022’s 5.9% increase will result in a more noticeable boost in benefits.
Disabled workers will receive on average $1,358 per month in 2022, up from $1,282 in 2021. However, for a disabled worker, spouse, and one or more children, theyll be paid on average $2,383 per month, an increase of $133 thanks to the 5.9% COLA.
What Is The Break Even Point And Why Is It Important
Whenever you wait until age 70 to collect benefits, you’ll be missing out on the years you weren’t receiving payments. If you’re deciding when to collect, you might consider calculating your break even point.
Your break even point tells you at what age you’ll receive more in total Social Security earnings, by collecting at full retirement age or at age 70, than you would have had you collected benefits early.
For many people, the breakeven point is around 12 and ½ years after age 70 or full retirement age, says Blair.
For example, if you collected early at age 62 rather than delay until your full retirement age of 67, you would be earning an additional five years worth of benefits. However, if you collected at 62, your benefit would be reduced by 30%. An individual collecting at age 67 would need to survive around another 12 years after collecting benefits to ‘break even’ compared to getting payouts starting at age 62.
You can calculate your own break even number, but note that the number might not be accurate if you don’t consider factors like the cost of living adjustment or having a spouse, divorced spouse or survivor’s benefit.
Advanced Filing Strategies For Survivors
In early 2018 the Office of the Inspector General released a report with some shocking news. 82% of widows and widowers who are receiving Social Security survivors benefits are actually entitled to a higher monthly benefit payment. The only problem is, the SSA never made them aware of this. This affected an estimated 9,224 widows and widowers 70 and older who could have received an additional $131.8 million in Social Security benefits had they been told they could delay filing for retirement benefits until reaching age 70.
Theres no need to wait for them to tell you about itlets jump in right now.
Prior to 2016 there were several popular Social Security filing strategies that would allow an individual to file for certain benefits and later switch back to their own benefits. The benefit of this was to allow their own benefits to grow with the 8% per year delayed retirement credits However, law changes in 2016 did away with many of the Social Security filing strategies. The one that remains belongs to survivors and it can be powerful. Heres how it works.
If you have a benefit based on your own work history, it could make sense to file for a reduced survivors benefit as early as 60. While you are drawing your survivor benefit, your own benefit grows every month you delay filing for it. Generally, these adjustments could grow your benefit by 77% from age 62 to age 70. At age 70, you simply switch back to your own benefit .
Receiving Social Security Payments
Social Security benefits are only paid out electronically you will not receive a Social Security check in the mail. You can either receive a direct deposit into your bank account or opt for a prepaid debit card. When you apply to receive your Social Security benefits, you will have the chance to provide your account number and the routing number of your bank or credit union.
You Have A Shorter Life Expectancy
The government incentivizes waiting to collect your Social Security benefits by giving you a larger monthly amount the longer you delay. For example, if you start collecting benefits at age 62 when your full retirement age is 66, your monthly benefit will be about 75% of your full-age benefit. So if you expected your monthly benefit to be $1,000 per month at 66, you would only receive around $750 at 62.
Although a larger monthly benefit might sound great, keep in mind that you’d have to wait four years to get that extra $250 per month. You would receive $36,000 during those four years at the reduced amount of $750 per month.
When you start collecting $1,000 at age 66, that extra $250 per month won’t let you break even for 12 years compared to collecting early. If your health is declining and you don’t expect to live until you’re 78, you’ll receive more in benefits during your lifetime if you start claiming as soon as possible.
Your May Have To Pay Taxes On Social Security Benefits
Most people know that you pay tax into the Social Security Trust Fund throughout your career, but some retirees don’t realize that you also have to pay tax on your Social Security benefits once you start taking them. Benefits lost their tax-free status in 1984, and the income thresholds for triggering tax on benefits haven’t been increased since then.
It doesn’t take a lot of income for your Social Security benefits to be taxed. For example, a married couple with a combined income of more than $32,000 may have to pay income tax on up to 50% of their Social Security benefits. Higher earners may have to pay income tax on up to 85% of their benefits.
You may also have to pay state income taxes on your Social Security benefits. See our list of the 12 States That Tax Social Security Benefits.
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Calculating The Benefit Amount
Figuring out how much youll receive in Social Security survivor benefits requires a little math. The simple explanation is that at the death of the first spouse, surviving spouses receives the higher of their own benefit, or the benefit of the deceased. But this simple explanation doesnt consider what age the deceased filed for benefits, if they did at all, and when the surviving spouse decides to file.
If the Deceased DID NOT File for Benefits
If the deceased spouse never filed for benefits, but died on or before their full retirement age, the calculation is relatively easy. The survivor receives the deceaseds full retirement age benefit, adjusted for the survivors filing age .
If the deceased spouse never filed for benefits, and died after their full retirement age, the survivor receives the deceaseds benefit in the same amount it would have been on the date of the deceaseds death reduced for the filing age of the survivor. You can see the next chart for more information on age-based reductions that come into play in both cases.
But what if the deceased spouse filed for benefits before he passed away? If this is the case, it could get a little more confusing.
If the Deceased DID File for Benefits
When it doesnt pay to delay
How To Get A Social Security Card
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Social Security Benefits For Surviving Spouses
If your spouse was receiving Social Security benefits upon their death, you must report the death as soon as possible. You can call the Social Security Administration at 1-800-772-1213 between 7 a.m. and 7 p.m. on weekdays or visit your local Social Security office in person.
You are eligible for a one-time, lump-sum death benefit of $255 from Social Security if:
- You were receiving benefits on your spouses record at the time of death, or
- If you were living in the same household as your spouse at the time of death.
Any benefits received in the name of your spouse during the month of death or later must be returned to the Social Security Administration as soon as possible.
If your spouse worked long enough under Social Security, you may be eligible for Social Security benefits. You must be age 60 or older or disabled and 50 or older to qualify.
How much youll receive depends on the percentage of your spouses benefit as well as your age and the type of benefit youre eligible for.
You must apply for survivor benefits in person. You can call Social Security at 1-800-772-1213 to request an appointment.
Full Retirement Age Continues To Rise
The absolute earliest that you can start claiming Social Security retirement benefits is age 62. However, claiming before your full retirement age will result in a permanently reduced payout.
Under current law, the retirement age for Social Security purposes is set to increase by two months each year until it hits 67. If you turned 62 in 2021, then your full retirement age is 66 and 10 months. Unless the law changes, anyone born in 1960 or later will not reach full retirement age until they are 67.
If you delay collecting Social Security past your full retirement age, then you can collect more than your full, or normal, payout. In fact, if you put off claiming until age 70, then you will receive an annual payout up to 32% higher than if you started receiving benefits at full retirement.
After age 70, there is no further incentive for delaying: Your monthly benefit stops increasing, with or without put-offs.
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You’re Planning Your End
Your Social Security benefits stop paying at your death, so if you die prior to collecting benefits, you’ll have missed out on benefits entirely. You need to figure out how to maximize your Social Security income, instead. For example, say you’re planning to wait until age 70 so you can claim the larger monthly benefit. If you die right before your 70th birthday, you won’t receive any benefits. It’s very difficult to predict how long you’ll live, especially if you’re in good health now. However, if you are suffering from a terminal or serious illness, the increased monthly benefit for delaying Social Security might not be worth it.
You’re Only Working Part Time
If you claim Social Security prior to your full retirement age while still holding down a part-time job, you might have your benefits reduced if your work income exceeds the annual limit. For 2021, if you are under full retirement age, your benefits go down by $1 for every $2 your income exceeds $18,960. If you reach full retirement age in 2021, your benefits go down by $1 for every $3 your income exceeds $50,520 prior to reaching full retirement age. If you’re working part-time to help make ends meet, taking Social Security at 62 might make sense.
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Timing And Your Health Coverage
Your health insurance coverage can also play a role in deciding when to claim Social Security benefits. Do you have a health savings account to which you would like to keep contributing? If so, note that if youre age 65 or older, then receiving Social Security benefits requires you to sign up for Medicare Part A, and once you sign up for Medicare Part A, youll no longer be allowed to add funds to your HSA.
The SSA also cautions that even if you delay receiving Social Security benefits until after age 65, you might still need to apply for Medicare benefits within three months of turning 65 to avoid paying higher premiums for life for Medicare Part B and Part D.
In 2022, the average monthly premium for Part D will be $33 per month versus $31.47 in 2021. If you enroll in a Medicare Advantage plan, the average monthly premium will be $19 per month in 2022 versus $21.22 in 2021. However, if you are still receiving health insurance from your or your spouses employer, you might not yet have to enroll in Medicare.
As of Oct. 16, 2021, Social Security offices are only open by appointment, and to get an appointment you need to be in a limited, critical situation. Most people will have to transact their business online, by phone, or through the mail.