Workers on Federal Disability Often Exceed Earnings Cap

To qualify for federal disability benefits, individuals must demonstrate that a medical condition prevents them from working. But some disability beneficiaries do work and those who earn more than Social Security allows are not entitled to a monthly benefit. These working beneficiaries may run the risk, often unwittingly, of being overpaid.  

The overpayments must be paid back, which can cause hardship for a group of individuals who are already struggling financially.

According to researchers at Mathematica, the risk is high that working beneficiaries receive payments they aren’t entitled to. While only 4 percent of the people in this study have earnings above the monthly limit, the Social Security Administration overpaid 82 percent of them during the decade the researchers tracked them.

The overpayments typically last several months and total around $9,300. Some people are never able to repay such large sums.

The earnings allowance amount notwithstanding, Social Security wants people receiving disability benefits to get back to work if possible and gives them leeway to test the job market without worrying about losing the benefits. Under the agency’s trial work period, they are permitted to earn more than $1,620 – the 2025 earnings allowance – for nine months and still get their monthly benefit checks. The nine months do not have to be consecutive.

After the trial work period ends, workers have a short grace period before they risk running afoul of the earnings limit, potentially triggering overpayment. The largest share of people who have been overpaid – 68 percent – eventually lose their disability benefits. A smaller share – 32 percent – continue to qualify, despite the excess earnings that caused the overpayments.

It is possible for either the Social Security Administration or the people receiving benefits to be responsible for these situations. The goal of this study was to document how pervasive the overpayments are and to identify ways to minimize them.

The agency is currently working to improve its access to earnings data from payroll firms so it can get current information more quickly. The researchers also said Social Security could send out more reminders to beneficiaries to provide timely earnings updates.

The goal, they said, is to “design policies that minimize overpayments or, if they occur, help beneficiaries maintain their connection to employment.” 

To read this study by Denise Hoffman, Monica Farid, Serge Lukashanets, Michael T. Anderson and John T. Jones, see “Work Overpayments Among New Social Security Disability insurance Beneficiaries.”

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement and Disability Research Consortium. The opinions and conclusions expressed are solely those of the authors and do not represent the opinions or policy of SSA or any agency of the Federal Government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.