Current Affairs

"When Social Security Sues A 6-Year-Old Over Its Own Mistake"

Even worse than the 6-year-old is Joan:

The worst case I've encountered was that of a disabled lady, who I'll call Joan. Joan, who was confined to a wheelchair, decided to try to write a book (a children's book) - one of the few things she could physically do.

To Joan's surprise, the book did well and she started receiving royalty checks - roughly $20,000 per year - for a number of years. Every year she contacted Social Security and asked if she could continue to receive Social Security disability benefits given her royalty income. Each time the Social Security officials told her that royalty income was different from labor income and does not trigger the system's Earnings Test, which reduces one's benefits 50 cents on the dollar for all earnings above a threshold.

Ten years later, Joan received a $300,000 bill from Social Security demanding immediate repayment of benefits, which the Social Security Administration "incorrectly," under its revised view, paid Joan over more than a decade.