In a story in yesterday's editions on Social Security disability payments, it was incorrectly reported that those over 65 years of age also lose their Medicare coverage when they are dropped from the rolls. In fact, only those under 65 lose their coverage.

In 1973, after lupus, an incurable crippling disease, forced her to stop working as a nurse's attendant, Mary Williams of Capitol Heights began receiving $366 a month in disability payments from Social Security.

Last year, under a speeded-up review of disability recipients ordered by the Reagan administration, the payments to Williams were stopped, and she was told to get a job, despite the fact that three government doctors had said she was totally disabled.

In August, after Williams had struggled for a year to pay the $203 rent on the apartment she shares with her teen-age sons, an administrative law judge ruled that she was eligible for the payments after all.

Her experience was not unusual. Since federal officials tightened eligibility standards and began closer scrutiny of the $18 billion disability program in March 1981, 157,980 people nationwide have been dropped from the Social Security rolls.

Aimed at weeding out the undeserving, the new procedures have in many cases imposed an unnecessary burden on thousands of disabled people who do in fact meet the government's strict standards. According to figures compiled by the Senate Finance Committee, administrative judges have ruled in favor of recipients 67 percent of the time since the accelerated program began.

The review program has succeeded in trimming the rolls to fit its strict definition of disability, a standard that is much tougher than private disability insurance. "You must be unable to do any kind of work," noted Social Security spokesman John Trollinger. "It doesn't matter that you don't have any experience, or if there aren't any jobs there."

Dropping ineligible people from the program has saved the federal government $216 million for the fiscal year ending Sept. 30, and a projected $458 million for next year, according to Social Security figures. But the savings have been offset by the huge volume of complaints from the disabled, advocacy groups and Capitol Hill.

Many of those who have been dropped suffer extreme hardships and are forced onto state welfare rolls. If they are over 65, they also lose Medicare reimbursement for their health care costs. And for some, the consequences are worse.

On Nov. 5, 1981, Herbert Tuttle, a father of three who was active in civic organizations, killed himself with a 16-gauge shotgun outside the Social Security office in Lansing, Mich., after learning that he was no longer eligible for benefits. His suicide note read, "They cut my Social Security. They are playing God."

One month later, Harold Holtz, 45, of Council Bluffs, Ind., shot himself in the head after a year of attempts to win Social Security disability benefits, after diabetes and triple bypass heart surgery forced him to give up his job driving a truck.

Those who wait for an appeals decision face nine or more months without income. "An immense amount of unjustified, needless, unconscionable suffering takes place during that year," said Sen. Carl Levin (D-Mich.), who is pushing an amendment to the debt ceiling bill that would slow down the rate of reviews and pay benefits until appeals are heard.

Many congressmen say the pain and confusion the reviews have caused isn't what they had in mind when they asked the Social Security Administration in 1980 to improve the monitoring of the disability income program, and its welfare sister, Supplemental Security Income.

The requests, contained in amendments to the Social Security Act, were aimed at paring down the growing cost of the disability insurance program, which was added to Social Security in 1956, and SSI, which took the place of state welfare programs for the disabled in 1972.

When the Reagan administration came into office, it moved the starting date of the program up nine months. It also ordered that eligibility standards then on the books be strictly enforced. In doing so, it was seeking changes in a vast system that cost nearly $18 billion and had nearly 4.4 million beneficiaries in the fiscal year ending last March.

In order to process benefits, there are federally-funded reviewing offices in every state and 800 administrative law judges. Disability cases appealed beyond the Social Security system account for almost 16 percent of all civil cases filed.

The congressional mandate to better monitor the program has had unexpected results. For one thing, overloaded reviewers are throwing out about 47 percent of all cases examined -- many more people than the 10 to 20 percent found by the Government Accounting Office and Social Security studies to be improperly receiving benefits. Critics say pressure to dispose of cases and a new emphasis on stricter standards are responsible. For their part, Social Security officials say most of the misunderstanding is over the program's tough standards.

What is clear is that the special state offices, called disability determination units, which are financed by the federal government to handle the reviews, have been overwhelmed with cases.

"We're struggling," said Roland Owens, assistant commissioner of rehabilitative services for Virginia. Since the closer scrutiny began, the federal government has sent Virginia 13,971 cases, compared to 2,897 reviews handled by the state in fiscal 1980. Forty-two percent of those reviewed under the tougher regulations were dropped.

In Maryland, 1,595 people have been dropped from the rolls, or 39 percent of the cases reviewed. In the District of Columbia, 357 people have lost benefits, or nearly 41 percent of those reviewed.

Most of these cases have their own sad stories of economic struggles and tangles with the bureaucracy over lost files and confusing notices.

In Fairfax, McDonald Huffman, 56, is considering bankruptcy as a solution to the financial woes he and his wife face. He had been receiving $444 a month in disability income but was notified in July that he was dropped because he was fit to work. A coal miner for most of his life, Huffman uses an oxygen tank at night to aid his breathing. He last worked for the county as a truck driver in 1973, until his supervisor said he could no longer take responsibility for Huffman's poor health. "I earned this money and it makes me mad to have to fight for it," Huffman said.

In Hyattsville, Robert Larkins, 47, and his wife, Alpha, had to move in with their daughter's family into a two-bedroom apartment after his $354 disability checks simply stopped coming in August 1981. Larkins, who cannot read or write, worked as a laborer until his kneecap was removed following a work-related accident in 1973.

"We just ain't got no home to live in," said Larkins, who also was informed in July that he owes the government $17,038 because his disability was "terminated" in 1978, although, he says, this was the first he or his Legal Services lawyer have ever heard of it.

Most of those dropped by the state agencies never see an examiner, but have their case decided by a review of their files, which often does not include pertinent medical information. Nonetheless, Social Security Administration officials say state examiners make mistakes in only 3 percent of the cases. When the decisions are reversed, explained Trollinger, it is usually because of additional medical data that's been assembled during a later appeal.

Recent revisions of the desk manual examiners use have made it more difficult to win benefits, too. Several advocacy groups claim state agencies are cracking down through internal, unpublished standards on those suffering mental disabilities and chronic pain. This suspicion has prompted lawsuits against the review program in nine states.

Nationwide, 29 percent of those dropped in the program's first year are mentally disabled, according to the U.S. House Select Committee on Aging. In Maryland, the state attorney general has filed a Freedom of Information request with the Social Security Administration to find out why the mentally disabled are being dropped from the rolls with much greater frequency.

"A staff member was told that only people who are literally climbing the walls can qualify for disability now on psychiatric claims," said Dr. Dennis Kutzer, a psychiatrist at the Springfield Hospital in Sykesville, who said 72 percent of disability claims now are denied. Three years ago, the rate was about 30 percent. The denials are keeping patients in costly state mental hospitals, according to mental health experts. They say these patients cannot be released because they cannot support themselves without the federal disability income.

The uproar over the manner in which the disability caseload was trimmed has prompted some changes. The Social Security Administration already has scaled down the number of reviews it expects to send the states this year. And, in the next few weeks, Commissioner John Svahn will require that recipients be notified in person, rather than by letter, that their cases are going to be reviewed.