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Tuesday, April 16, 2024

Beneficiaries required to repay less following Social Security overpayment cuts

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WASHINGTON — ⁣In a significant shift, the Social Security Administration has ‌announced that ⁤recipients who have been overpaid‍ will now be required ​to repay a significantly smaller portion of the excess amount.

On Friday, the Social Security Administration declared a change in its⁣ policy. Instead⁤ of automatically deducting 100% of the overpayment from⁢ the monthly benefits of recipients, ​the agency will now only collect 10% — or ‌$10, whichever is higher — to recover the overpayment.

Exceptions to this rule will be few and far between, ‌and will primarily apply in ​cases where the overpayment was a result of⁢ fraudulent activities.

“We​ are taking a crucial step towards achieving ​our objective of ensuring that our overpayment policies are​ just, balanced, ​and do not ⁤cause undue hardship to anyone,” stated Social Security Commissioner Martin O’Malley. “It’s unthinkable that someone could face homelessness or be unable to pay their bills because Social⁤ Security withheld their​ entire payment to recover an overpayment.”

This policy change⁣ will apply to new overpayments. However, those who are currently having more⁤ than‌ 10% of their benefits withheld can reach⁢ out to the⁤ Social Security Administration to discuss the possibility of reducing the rate.

Beneficiaries who wish to have a rate lower than 10% will be approved if the overpayment can be recovered within 60 months. This ‌is a significant extension from the previous deadline​ of‍ 36 months.

The Social Security Administration has recently faced criticism for mistakenly overpaying beneficiaries and then aggressively ‍reclaiming the funds. This issue has​ been⁢ highlighted by several media outlets and was the subject of a hearing by a House Ways and Means subcommittee last ⁢fall.

“Improper payments,⁢ many of which ‌are not⁤ the fault of the recipients, do indeed impose a ⁤heavy burden on them,” stated Georgia Rep. Drew Ferguson, the Republican chairman of ⁣the subcommittee, in his‍ opening remarks at the hearing. “That’s why we need to do more⁤ to prevent these situations from occurring in⁢ the first place.”

According to a report by the Government Accountability ‌Office,‌ the ​majority of recipients who receive Social Security disability benefits and have ⁢sufficient earnings to affect their benefits receive an overpayment. The report, which cited a 2019 study by the Social Security Administration and Mathematica, a research and consulting firm, found that‌ overpayments ⁢typically lasted‍ nine months and ⁣amounted to‌ nearly $9,300.

In the fiscal year 2023, the Social⁣ Security Administration made monthly payments to an average of approximately 72‌ million people, as per the ‍agency’s latest financial report. ​The agency distributed more than $1.4 trillion in benefits during this period.

Out‌ of the $1.3 trillion it paid to senior​ citizens, ‍survivors, and people with disabilities in the fiscal year 2022, the agency estimated that $6.5 billion were overpayments, representing about 0.5% of the total. ​It also estimated that $4.6 billion, or 8%, of the $57.6⁤ billion⁣ it paid ⁣in Supplemental‌ Security Income to low-income senior citizens and people with ‌disabilities that year were overpayments.

In ⁢the fiscal year 2023, the Social Security Administration recovered more than $4.9 billion in overpayments but ended the year with a total ‍balance ​of $23 billion in uncollected payments.

An independent auditor’s report by Ernst & Young in the fiscal ​year 2023 identified a ​”significant deficiency in internal control” ‌regarding overpayments. This included ⁢”deficiencies” in documenting and calculating benefit overpayment and in maintaining records ⁢and tracking long-term installment ⁢payments.

In response to these issues, then-Acting Commissioner Kilolo Kijakazi initiated a review of the⁤ agency’s overpayment procedures and policies in October.

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