US Retiree in Netanya Recovers USD 28,100 in Suspended Social Security

Result: Benefits reinstated and USD 28,100 of arrears paid, with the monthly benefit rising by USD 623 · Timeline: 3 weeks to reinstatement, 12 weeks to the final arrears deposit · Challenge: Questionnaire posted to a former Israeli address · Authority: Social Security Administration, through the Federal Benefits Unit at the United States Embassy in Israel · Financial Impact: USD 28,100 recovered plus a NIS 46,800 Israeli refund claim

Background

An American engineer made aliyah in 2011 at sixty-two, after twenty-two years with a defence contractor in Massachusetts. He worked another seven years for an Israeli employer in Herzliya before retiring in 2018, which left him with two pensions: a United States Social Security retirement benefit built on his American credits, and a modest Israeli occupational pension from the Herzliya years. In 2023 he and his wife sold the Ra'anana flat and moved to a smaller place in Netanya. They told Bituach Leumi, the kupat holim, the bank, and the municipality. It did not occur to either of them to tell the Social Security Administration, because the money had been arriving in a US credit union account without interruption for twelve years.

His daughter, who handles the American paperwork from Boston, noticed in April 2026 that three monthly deposits were missing. When she called, the recording told her the account was in suspense. Nobody could tell her why over the phone from the United States, because a beneficiary living abroad is serviced by a different part of the agency altogether.

The Challenge

Two things had gone wrong, and only one of them was the family's fault.

The immediate cause was form SSA-7162, the foreign enforcement questionnaire. The Social Security Administration posts it to beneficiaries living outside the United States to confirm that they are alive, still eligible, and that nothing has changed in their marital or work status. A beneficiary has sixty days from receipt to complete and return it. Miss that window and payments are suspended, and the suspension bites with the February payment, which covers January benefits. The form had gone to the Ra'anana address, which by then belonged to somebody else, and the family never saw it. Israel Post does not forward indefinitely and does not forward foreign government mail reliably at all.

Underneath the suspension sat a second problem that had been costing him quietly for two years. Because his Israeli occupational pension is a pension from work not covered by United States Social Security, the Windfall Elimination Provision had been reducing his American benefit by about USD 561 a month since 2018. That provision was repealed. The Social Security Fairness Act, signed on 5 January 2025, abolished both the Windfall Elimination Provision and the Government Pension Offset, with effect from January 2024, so his benefit should have been recomputed and a retroactive payment issued. The agency paid most of those retroactive amounts by the end of March 2025 through automated processing. Cases with a foreign non-covered pension and an unusual benefit history were routed for manual recomputation, and eighteen months later some of them are still moving. His was one, and once his record went into suspense in February 2026 there was nowhere for the recomputed money to be paid even when it was calculated.

In Practice: Form SSA-7162 must be returned within 60 days of receipt, and non-return suspends payments beginning with the February cheque covering January benefits. The route back is not the SSA's domestic telephone line but the Federal Benefits Unit at the United States Embassy in Israel, which accepts the completed form or takes an attestation directly. Once the unit records it, reinstatement typically follows within about seven business days, and suspended months are paid as arrears rather than forfeited. Six suspended payments in this case came to USD 9,840 at the pre-correction rate. The single most useful preventive step costs nothing: report every Israeli address change to the SSA the same week you report it to Bituach Leumi.

What We Did

We were instructed in the second week of May 2026, six weeks after the family first noticed the gap.

Reinstatement first, questions later. We did not start with the arrears, because an account in suspense cannot receive anything. The Federal Benefits Unit was contacted by email with a scanned completed SSA-7162, a copy of his US passport, his Israeli teudat zehut, and the Netanya address with a municipal arnona bill as proof. The unit confirmed receipt, the account came out of suspense, and the June payment arrived on time. From first contact to a live account was under three weeks, and the six missed months were deposited in early July as USD 9,840 at the old rate.

Then the recomputation. With the record live, we asked the unit to confirm whether the Social Security Fairness Act recomputation had been applied. It had not. The request was logged, the manual recomputation ran through June and July, and at the end of July the corrected primary insurance amount was applied prospectively with arrears back to January 2024. The monthly benefit went from USD 1,640 to USD 2,263, the increase reflecting both the removal of the reduction and the 2.8 per cent cost of living adjustment that applied from January 2026. That adjustment is worth stressing to anyone who moves abroad: an American Social Security benefit keeps its annual increase wherever the beneficiary lives, unlike the UK State Pension, which is frozen in some countries.

The Israeli half, which nobody had looked at. His ten-year exemption for new immigrants under Section 14(a) of the Income Tax Ordinance 1961 ran out in 2021. From the 2021 tax year onwards his Israeli accountant had included the American benefit as taxable foreign income on the annual return, and he had paid Israeli tax on it. That was wrong. Article 21 of the United States and Israel income tax treaty assigns social security payments to the paying state, and it survives the saving clause in Article 6(3), so the United States taxes the benefit and Israel does not, oleh window or no oleh window. His American accountant had suggested filing Form 8833 in the United States, which does nothing here, because the disclosure that matters is made to the Israeli assessing officer and not to the IRS. We filed a refund claim with the Netanya assessing office for the tax paid on the benefit across four tax years.

In Practice: Section 160 of the Income Tax Ordinance 1961 allows a refund of tax paid in excess within six years from the end of the tax year in which the excess was paid, with CPI linkage and 4% annual interest added, and the assessing officer takes four to nine months on a clean file. The claim filed at the Netanya assessing office covers NIS 46,800 of Israeli tax paid on a benefit that Article 21 of the treaty places outside Israeli taxing rights entirely. The six-year clock runs from the tax year of payment, not from the year the mistake is discovered, so the 2021 year expires at the end of 2027 whatever happens to the rest of the claim.

The Outcome

The arrears reached his account in two deposits totalling USD 28,100: USD 9,840 in early July for the six suspended months, and USD 18,260 at the end of the month for the retroactive removal of the reduction, covering January 2024 through July 2026. His monthly benefit is USD 623 higher than it was before any of this started, which over a normal remaining life expectancy is worth considerably more than the arrears themselves.

The Israeli refund claim is still with the assessing officer and we expect a decision before the end of the year. Even discounting it entirely, the family recovered USD 28,100 that they had written off as either lost or never known about, on a matter that took twelve weeks of correspondence and no hearing, no appeal, and no travel by anyone.

Two smaller points were tidied up in the same file. His health cover runs through a kupat holim on the strength of his Bituach Leumi residency, because Medicare pays for nothing in Israel and a supplementary American policy sold on the promise of foreign cover is rarely worth what it costs. And his Israeli occupational pension earns him no American credits and never will, because there is no totalization agreement between the United States and Israel, contrary to a claim that circulates widely online and appears in some professional summaries. The two systems do not talk to each other, which is exactly why he had a non-covered pension triggering the old reduction in the first place.

Key Takeaways

What this case illustrates for non-residents in similar situations:

1. Report an Israeli address change to the SSA, not just to Bituach Leumi. Form SSA-7162 is posted to the address on the agency's file, sixty days runs from receipt, and Israeli mail forwarding will not save you. This is the single commonest reason an American retiree in Israel loses payments.
2. A suspended account cannot receive arrears. Reinstatement through the Federal Benefits Unit at the US Embassy comes first. Chasing a recomputation, an appeal, or a retroactive payment while the record is in suspense achieves nothing.
3. Check whether the WEP repeal was actually applied to your record. The Social Security Fairness Act took effect from January 2024 and most adjustments were automated by March 2025, but cases involving a foreign non-covered pension were routed for manual handling and some are still outstanding. An Israeli occupational pension is exactly the kind that was affected.
4. Israel does not tax US Social Security, even after the oleh window closes. Article 21 of the US and Israel treaty survives the saving clause. Accountants who add the benefit to Israeli taxable income once the Section 14(a) exemption expires are making a common and expensive mistake.
5. Reclaim the Israeli tax within six years of the tax year, not of the discovery. Section 160 of the Income Tax Ordinance 1961 measures the window from the end of the tax year in which the excess was paid, so an error found late loses its oldest years first.

Our full guide to US Social Security while living in Israel covers the payment mechanics and the treaty analysis in more depth, and the persistent myth about credit combining is dealt with in our Q&A on the US and Israel totalization agreement.

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Facing a Similar Situation?

If your American benefit has stopped, or if your Israeli return has been treating it as taxable income since your immigrant exemption expired, both problems have a fixed window and both are usually recoverable if you start now.

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