MoneyLine:
If you have student loans outstanding, try to keep your payments
current. If you're delinquent, the government may tap your Social
Security benefits to cover your debts, as the following question from a
woman in Cranston shows:
Q: I've been trying to find out some information regarding my
brother, who's on Social Security disability. He only makes $649 a
month, and he had a debt on a college loan, and they told him that
they're going to start seizing his check if he doesn't pay . . . I
wanted to know if they have any legal right with that, because it says
other federal debts can be taken . . . If you could give me some
information on who I could contact . . . He's under a lot of stress. . .
.
-- D.K., Cranston
A: In general, if you're delinquent on debts you owe the federal
government, the government has the right to lay claim to some of your
Social Security benefits to help pay off those debts, said Kurt
Czarnowski, regional communications director of the Social Security
Administration.
However, the government can't reduce your Social Security benefits for
this purpose below $750 per month, Czarnowski said. "Therefore, SSA
beneficiaries who have been identified . . . as delinquent debtors will
still receive at a minimum $750 per month," according to the Social
Security Administration's programs operations manual.
As a result, your brother's benefits -- $649 a month -- are fully
protected and cannot be reduced under the government's debt-collection
program, Czarnowski said.
But other readers need to be aware of this little-known program. I've
written about it before, but mainly as it relates to delinquent federal
taxes. It's important to note that your benefits may also be "offset" to
cover certain other federal debts, including delinquent
government-backed student loans.
It's part of the government's "benefit payment offset" program, which is
run not by Social Security, but by the U.S. Treasury's Financial
Management Service branch. The government gets its authority for this
from a federal law enacted in 1996 (the Debt Collection Improvement Act).
In general, that law requires federal agencies to reduce federal
payments (such as Social Security benefits) to collect on delinquent
debts owed to the federal government.
As part of that program, the Financial Management Service compares
records of Social Security payments to a large computer database of
delinquent debtors.
If there's a match, the Financial Management Service notifies the
beneficiary, reduces the beneficiary's payments (under certain
conditions), and ships the money to the federal agency that's owed the
debt.
Among those agencies that may receive money under this program are the
U.S. Department of Education, for delinquent government-backed education
loans; the Department of Veterans Affairs, for delinquent VA home loans;
and the federal Food and Nutrition Service, for food stamp overpayments.
Here are some other points to keep in mind:
Beneficiaries receive advance notice and warning before their benefits
are reduced, and can take steps to avoid offset.
Each federal agency that takes part in the program has its own rules for
appeals and hardship cases.
Although some benefits run by the Social Security Administration are
subject to offset, including retirement, disability and survivor
benefits, some are not, such as Supplemental Security Income (SSI)
benefits.
Your Social Security benefits may also be offset for other reasons -- to
pay delinquent federal income taxes, for example, or if you're
delinquent on court-ordered alimony or child-support payments,
Czarnowski said.
There are lots of rules and other details, too many to list here. For
more information about the benefit payment offset program, call the
Financial Mangement Service toll-free at (800) 304-3107.
TODAY'S TIP: Weiss Ratings Inc., a company in Florida that issues
safety ratings on insurance companies and other financial institutions,
has published "Consumer Guide to Elder Care Choices," a detailed 47-page
resource that describes the various elder-care services available to
consumers.
It focuses on assisted-living facilities, home health care, adult
daycare, nursing homes, and continuing care retirement communities. It
looks at the costs, services, advantages and disadvantages of each;
offers tips on finding and evaluating elder-care facilities; and
includes checklists to help you in your search.
The guide, which costs $39, may be ordered from Weiss toll-free at (800)
289-9222, or through the company's Web site:
www.weissratings.com
Neil Downing is a Journal staff writer and author of The New IRAs and
How to Make Them Work for You. Questions about your money matters? Call
us at 1-401-277-7484 or 1-888-697-7656 (ask for ext. 7484) and leave a
message. Sorry, no personal replies; as many questions and issues as
possible will appear in this column.
