Peculiar man ‘one step from being homeless’ after Social Security demands repayment

By Angie Ricono

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    KANSAS CITY, Missouri (KCTV) — Social Security was created to help provide income to Americans with disabilities or those in retirement. For some, it’s a lifeline.

But this government safety net is currently in a harsh spotlight as people step forward with horror stories of Social Security demanding some of the money back.

Tim Middaugh got a letter saying he owned tens of thousands of dollars.

He’d been receiving Social Security benefits for years.

“Everything was good, and then here comes this letter saying that they owe I owe them $62,000 back money,” said Middaugh. “I didn’t know what to think. I mean, I just, I just couldn’t figure out what they were even talking about!”

Middaugh told KCTV5 he can’t make ends meet. He lives in a trailer in Peculiar, Missouri. He owns a rusted truck that he needs to pay taxes on. His prized possession is a rescue cat.

He relayed that he can’t pay the money back.

“There’s no way,” Middaugh said. “The scary part of this is, I’m just one step away from being homeless.”

Middaugh has sold everything he can to stay afloat — guns, jewelry and lifelong treasures.

“I sold a Snap-on toolbox that I’ve had since I was 18 years old,” said Middaugh. “(It) was my pride and joy. It’s gone.”

Middaugh agreed to a payment plan that he described as a “hostage situation.” His monthly benefit was cut more than $500 leaving him around a thousand dollars a month to live on.

“They beat me to a pulp,” Middaugh said.

According to the agency, more than 65 million Americans receive benefits, but about a million each year are getting notification letters they were overpaid.

Some of the overpayments are from decades ago.

The talk in Congress

Many in Washington wonder how this happened. An investigation revealed that many of those who can least afford it are being asked to repay the money.

The issue was recently discussed in the House Ways and Means Committee. And the head of the Social Security Administration was called in to testify.

“There’s got to be a solution here,” said Rep. Randy Feenstra, a Republican from Iowa.

“These are people living by the rules they thought they were doing everything fine,” said Rep. Mike Carey, a Republican from Ohio.

Kilkolo Kijakazi, the acting commissioner of the Social Security Administration, told the representatives that she has ordered a “comprehensive review” of the overpayments.

The government acknowledges most of the overpayments are because of errors in the agency. It can be years before mistakes are discovered. But by law, the money must be paid back.

Going public with horror stories

Examples are being collected and categorized. Financial columnist and author Terry Savage and economist Laurence Kotlikoff have teamed up. They’ve written a book, “Social Security Horror Stories” and developed a website socialsecurityhorrorstories.com.

“We want an 18-month statute of limitations,” said Savage, “If Social Security makes a mistake, they should catch it quickly. After 18 months, it’s their problem, not yours.”

The website invites those hit with the overpayment letters to share their stories. They said the hope is to demonstrate the magnitude of the problem.

“We hear stories going back 35-40 years,” said Savage. “People are just terrorized by these, ‘Pay in 30 days or else,’ and the URL says they have all the power to stop your check right now.”

Social Security’s annual overpayments add up. In 2022, the clawbacks added up to $3.354 billion. But it’s estimated payment errors totaled more than $21 billion.

Tim Middaugh can’t speak to billions, but he does know how hard it has hit him. His diet consists primarily of budget TV dinners.

“I went to the grocery store out here last night and the gal made the comment, ‘I can get this in one sack if you want to,’ and I said, ‘That’s fine,’” said Middaugh.

He says the ordeal has left him needing medications for depression.

“I don’t know what else to do,” said Middaugh. “I don’t know where to turn.”

How to avoid a clawback

Determining the correct benefit someone has earned can be complicated. If you were employed by a state, or school district, those benefits must be considered.

One of the best ways to avoid having to pay back thousands of dollars is to know where you stand. You can check to see what income information the Social Security Administration has for you at “my Social Security” account. Check to see if the information is accurate. You can also see what your benefit is expected to be and how it changes the longer you work. While some people were overpaid, there are many others who were underpaid. Do the research to determine what you can expect for your benefit.

The CBS program 60 Minutes has reported on the issue and has additional tips on avoiding a government clawback. The overpayment clawback doesn’t just affect retirees. Some who are receiving or have received disability benefits are also receiving letters demanding repayment.

Nearly a million people a year get a letter from the Social Security Administration demanding a repayment. If you get a letter, you can request a waiver. There is information on Social Security’s website about how to do that. You can mail, fax or call with that request.

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