Social Security Changes How Overpayments are Handled
The rate was reduced to prevent financial hardship on those with overpayments, the Social Security Administration said.
The Social Security Administration (SSA) announced a change to how they will collect overpayments that were given to recipients, following months of criticism and conversation about its massive overpayments problem.
Social Security had an overpayment problem where recipients were mistakenly given too much money. The agency had been sending notices to those it overpaid asking for money back, and there were clawbacks, whereby the agency would reduce or stop monthly benefit checks, KFF Health News reported.
Now, the agency is restricting the overpayment withholding rate for beneficiaries, with a cap of 10% or $10 of a total monthly benefit, whichever is greater. That means Social Security can no longer withhold 100% of a monthly benefit to recoup an overpayment, and it's effective as of March 25.
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“Social Security is taking a critically important step towards our goal of ensuring our overpayment policies are fair, equitable, and do not unduly harm anyone,” Commissioner of Social Security Martin O’Malley said in a statement. “It’s unconscionable that someone would find themselves facing homelessness or unable to pay bills, because Social Security withheld their entire payment for recovery of an overpayment.”
The new rate significantly reduces the financial hardship brought on to people with overpayments, the agency said. However, there will be exceptions to the change, such as when an overpayment resulted from fraud, it added.
The new rate applies to new overpayments, the SSA said. If beneficiaries already have an overpayment rate greater than 10% and would like to reduce their rate, they will need to call Social Security at 1-800-772-1213 or visit a local Social Security office to speak with a representative.
A 10% rate is what new SSA commissioner O’Malley alluded to last month when discussing how he would fix the “cruel-hearted” overpayment clawbacks.
What is an overpayment?
An overpayment occurs when a beneficiary receives more money in a month than they should have, which could be a result of several factors, including:
- Your income is more than you estimated
- Your living situation changed
- Your marital status changed
- You have more resources than the allowable limit
- You are no longer disabled but continue to receive benefits
- You did not report a change in a timely manner to the SSA as required
- You reported incorrect or incomplete information that caused the SSA to incorrectly calculate your benefit
Overpayments can also occur due to SSA itself making mistakes, as noted in a September 2023 KFF Health News investigative report.
A $23 billion issue for the Social Security Administration
The announcement by the SSA comes as it tries to recoup $23 billion in overpayments. The collection efforts have sparked outrage, including from lawmakers.
“The Social Security Administration screwed up, and now they’re demanding that seniors pay for the administration’s mistakes,” Rep. Marc Molinaro (R-NY) said in a September 2023 statement. “Most victims will have no way of ever paying Social Security back. The Social Security Administration needs to stop aggressive prosecutions of seniors and focus on fixing their systems.”
The new automatic overpayment recovery rate may help alleviate the financial burden faced by beneficiaries with overpayments, but the large overpayment balance remains.
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