You are a pioneer. While there have been quite a number of media stories on Form 521 it was only recently that a reporter (I believe at Kiplinger's magazine) asked the Social Security Administration how often this happened. Answer: So far this year, 71 people.
So it's not a common event. Because it is a common event you can't expect that many agents at the local Social Security office will be familiar with the procedure. Their most common experience is getting people their benefits as early as possible. You should not have to pay back the Medicare premiums. That is a separate program. It isn't clear whether some, or any, of the benefits your wife received would have to be returned. If her benefit remains unchanged, there should be no need to return her benefits. First, it could be based entirely on her earnings record, not yours. Second, if it is based on your earnings record, she could opt to retain her current benefit. If she did return her benefits then she should have a new benefit, calculated on the new basis. So it would still be a good transaction.
Given the inexperience on the SS side, I think you'll have to go slowly and be patient with this.
