The Social Security Administration has announced a change in its policy regarding overpayments to recipients. Instead of automatically withholding 100% of the overpayment amount from monthly benefits, the agency will now collect only 10% or $10, whichever is greater, to recover the overpayment. This change is aimed at ensuring that recipients are not unduly harmed by having their entire payment withheld for overpayments. Limited exceptions will be made for cases involving fraud.
Recipients who are currently having more than 10% of their benefits withheld can contact the Social Security Administration to discuss reducing the rate. Those who would like a rate lower than 10% will be approved if the overpayment can be recovered within 60 months, rather than the previous deadline of 36 months. The change applies to new overpayments, and beneficiaries are encouraged to reach out to discuss their specific situations.
The Social Security Administration has come under scrutiny for mistakenly overpaying beneficiaries and then attempting to recover the funds. A House Ways and Means subcommittee held a hearing on the issue, emphasizing the burden that improper payments place on recipients. A Government Accountability Office report revealed that the majority of recipients of Social Security disability benefits who have earnings that affect their benefits receive overpayments. The agency has estimated significant amounts of overpayments in both Social Security and Supplemental Security Income programs.
In fiscal year 2023, the Social Security Administration paid out over $1.4 trillion in benefits to roughly 72 million individuals. Of this amount, it estimated $6.5 billion were overpayments, and the agency recovered more than $4.9 billion in overpayments that year. However, there is still a total balance of $23 billion in uncollected payments. An independent auditor’s report found deficiencies in internal control regarding overpayments, leading to a review of the agency’s overpayment procedures and policies initiated by then-Acting Commissioner Kilolo Kijakazi in October.
The change in overpayment recovery policy is a critical step towards ensuring fairness and equity in how overpayments are handled. Social Security Commissioner Martin O’Malley emphasized the importance of this change in preventing recipients from facing financial hardships due to overpayment recovery. Recipients are encouraged to engage with the Social Security Administration to discuss their specific situations and explore options for reducing the rate of overpayment recovery. Moving forward, the agency will continue to work towards improving its procedures and policies to prevent improper payments and enhance transparency in the overpayment recovery process.
