Changes to Social Security Overpayment Recovery: Monthly Benefits No Longer Withheld at 100 Percent

Changes to Social Security Overpayment Recovery: Monthly Benefits No Longer Withheld at 100 Percent

The Social Security Administration (SSA) has announced a significant change to its policy regarding the recovery of overpayments from Social Security beneficiaries. Previously, if a beneficiary had been overpaid, the agency would withhold 100 percent of their monthly benefits until the overpaid amount was recovered. However, as of March 25th, the agency will now only collect ten percent (or $10, whichever is greater) of the total monthly Social Security benefit to recover an overpayment.

This change comes in response to criticism from lawmakers who argue that the 100 percent withholding policy places a burden on vulnerable Americans who rely on their benefits. The SSA acknowledges that seeking repayment can create financial difficulties for beneficiaries and believes that the new measure will alleviate some of these challenges.

There will be a transition period during which beneficiaries will continue with the older policy. However, those who are placed in the 100 percent withholding category can contact Social Security’s National 800 Number for assistance. Additionally, the change only applies to new overpayments. Beneficiaries who already have an overpayment with a withholding rate greater than 10 percent can contact the agency or their local Social Security office to request a lower recovery rate.

The SSA has also made changes to its approval process for lower recovery rates. Previously, the agency only allowed recovery within 36 months, but it has now increased this period to 60 months. If a beneficiary’s proposed rate would extend recovery beyond 60 months, the agency will gather income, resource, and expense information to make a determination.

Importantly, beneficiaries have the right to appeal the agency’s overpayment decision or the amount. They can also request that the SSA waive the collection of the overpaid amount if they are unable to pay it back. During the appeal or waiver process, the agency will not pursue recoveries.

The SSA’s fiscal year 2023 financial report reveals that the agency paid approximately $1.26 trillion in social security benefits in fiscal year 2022, which includes the Old-Age and Survivors Insurance and Disability Insurance programs. Out of this amount, the agency estimates that it made $6.5 billion in overpayments, accounting for 0.51 percent of the disbursal.

Lawmakers have been critical of the high number of overpayments and their impact on beneficiaries. Chairman Drew Ferguson highlighted the burden faced by Americans dealing with overpayments during a Social Security Subcommittee hearing, stating that even a small percentage of errors can have a significant impact when dealing with such a large program.

U.S. Senators Maggie Hassan and Bill Cassidy have also expressed concern over the financial hardship placed upon beneficiaries who are asked to repay overpayments or whose payments are halted or reduced due to agency error. They have urged the SSA to take action to prevent harm to vulnerable recipients of the program.

A report from the U.S. Government Accountability Office (GAO) in 2022 found that overpayments can impose significant burdens on Disability Insurance (DI) beneficiaries. The majority of DI beneficiaries who have earnings sufficient to affect their benefits receive overpayments, which can accumulate to thousands of dollars. The GAO concluded that while the SSA has made efforts to reduce overpayments, more work needs to be done.

In response to these concerns, the SSA launched a review of its overpayment policies and procedures in October 2022. The new rule reducing overpayment recovery to 10 percent is a direct result of this ongoing review. The agency is also working on establishing information exchanges with payroll data providers to reduce the number of improper payments.

Overall, the changes to Social Security overpayment recovery aim to address the burden placed on beneficiaries and ensure fairness in the system. By reducing the withholding rate from 100 percent to 10 percent, vulnerable Americans will have more financial stability and will be less likely to face homelessness or other hardships. However, there is still work to be done to further reduce overpayments and improve the accuracy of payments. The SSA’s ongoing efforts and collaboration with payroll data providers show a commitment to addressing these challenges and ensuring the integrity of the Social Security program.